International Equity ETFs |
Prospectus | |
March 15, 2024 |
WisdomTree International Equity ETFs*
Developed World ex-U.S. International Equity Fund ( )International High Dividend Fund ( )International LargeCap Dividend Fund ( )International MidCap Dividend Fund ( )International SmallCap Dividend Fund ( )International AI Enhanced Value Fund ( )International Quality Dividend Growth Fund ( )International Multifactor Fund ( )Europe Quality Dividend Growth Fund ( )Europe SmallCap Dividend Fund ( )Japan SmallCap Dividend Fund ( )
Currency Hedged Equity Japan Hedged Equity Fund ( )Japan Hedged SmallCap Equity Fund ( )Europe Hedged Equity Fund ( ) |
Europe Hedged SmallCap Equity Fund ( )International Hedged Quality Dividend Growth Fund ( )
Global/Global ex-U.S. Global High Dividend Fund ( )Global ex-U.S. Quality Dividend Growth Fund ( )New Economy Real Estate Fund ( )
Emerging/Frontier Markets Emerging Markets High Dividend Fund ( )Emerging Markets SmallCap Dividend Fund ( )Emerging Markets Quality Dividend Growth Fund ( )Emerging Markets Multifactor Fund ( )Emerging Markets ex-State-Owned Enterprises Fund ( )India Earnings Fund ( )China ex-State-Owned Enterprises Fund ( ) |
* Principal U.S. Listing Exchange: NYSE Arca, Inc. (except DXJS, CXSE and DGRE are listed on NASDAQ and IQDG is listed on Cboe BZX Exchange, Inc.) |
THE U.S. SECURITIES AND EXCHANGE COMMISSION (“SEC”) HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
WisdomTree Trust
Table of Contents |
The WisdomTree International Equity Fund (the “Fund”) seeks to track the price and yield performance, before fees and expenses, of the WisdomTree International Equity Index (the “Index”).
The following table describes the fees and expenses you may pay if you buy, hold and sell shares of the Fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example below. The fees are expressed as a percentage of the Fund’s average net assets.
Management Fees | |
Distribution and/or Service (12b-1) Fees | |
Other Expenses | |
Total Annual Fund Operating Expenses |
1 |
The following
example is intended to help retail investors compare the cost of investing in
the Fund with the cost of investing in other funds. It illustrates the
hypothetical expenses that such investors would incur over various periods if
they were to invest $10,000 in the Fund for the time periods indicated and then
redeem all of their shares at the end of those periods. This example assumes
that the Fund provides a return of 5% a year and that operating expenses remain
the same. This example does not include the brokerage commissions that retail
investors may pay to buy and sell shares of the Fund.
1 Year | 3 Years | 5 Years | 10 Years | |
$
|
$
|
$
|
$
|
The Fund pays
transaction costs, such as commissions, when it buys and sells securities (or
“turns over” its portfolio). A higher portfolio turnover rate may indicate
higher transaction costs and may result in higher taxes when Fund shares are
held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the example, affect the Fund’s performance. During the
most recent fiscal year, the Fund’s portfolio turnover rate was
The Fund employs a “passive management” – or indexing – investment approach designed to track the performance of the Index. The Fund generally uses a representative sampling strategy to achieve its investment objective, meaning it generally will invest in a sample of the securities in the Index whose risk, return and other characteristics resemble the risk, return and other characteristics of the Index as a whole. Under normal circumstances, at least 95% of the Fund’s total assets (exclusive of collateral held from securities lending) will be invested in component securities of the Index and investments that have economic characteristics that are substantially identical to the economic characteristics of such component securities.
The Index is a fundamentally weighted index that is comprised of companies in the industrialized world, excluding Canada and the United States, that pay regular cash dividends. To be eligible for inclusion in the Index, a company must meet the following criteria as of the annual Index screening date: (i) incorporation in one of 15 developed European countries (Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, or the United Kingdom), Israel, Japan, Australia, Hong Kong or Singapore; (ii) payment of at least $5 million in cash dividends on shares of common stock during the preceding annual cycle; (iii) market capitalization of at least $100 million; (iv) median daily dollar trading volume of at least $100,000 for the preceding three months; and (v) trading of at least 250,000 shares per month for each of the preceding six months.
2 WisdomTree Trust Prospectus |
Securities are weighted in the Index based on dividends paid over the prior annual cycle. Companies that pay a greater total dollar amount of dividends are more heavily weighted. To derive a company’s initial Index weight, (i) multiply the U.S. dollar value of the company’s annual gross dividend per share by the number of common shares outstanding for that company (the “Cash Dividend Factor”); (ii) calculate the Cash Dividend Factor for each company; (iii) add together all of the companies’ Cash Dividend Factors; and (iv) divide the company’s Cash Dividend Factor by the sum of all Cash Dividend Factors. On the Index’s annual screening date, the Index caps the weight of components exposed to any one country and any one sector (except for the real estate sector) at 25%. The weight of components exposed to the real estate sector is capped at 15%. The Index also may adjust the weight of individual components on the annual screening date based on certain quantitative thresholds or limits tied to key metrics of a component security, such as its trading volume. To the extent the Index reduces an individual component’s weight, the excess weight will be reallocated pro rata among the other components. Similarly, if the Index increases a component’s weight, the weight of the other components will be reduced on a pro rata basis to contribute the weight needed for such increase. The weight of a sector, country, or individual component in the Index may fluctuate above or below specified caps and thresholds, respectively, between screening dates in response to market conditions.
WisdomTree, Inc. (“WisdomTree”), as Index provider, currently uses the Global Industry Classification Standard (GICS®), a widely recognized industry classification methodology developed by MSCI, Inc. and Standard & Poor’s Financial Services LLC, to define companies within a sector. The following sectors are included in the Index: communication services, consumer discretionary, consumer staples, energy, financials, health care, industrials, information technology, materials, real estate, and utilities. A sector is comprised of multiple industries. For example, the energy sector is comprised of companies in the energy equipment and services industry as well as the oil, gas and consumable fuels industry. As of June 30, 2023, companies in the financials sector comprised a significant portion (i.e., in excess of 15% of the Index’s total weighting) of the Index; however, the Index's sector exposure may change from time to time.
As of June 30, 2023, the equity securities of companies domiciled in or otherwise tied to Japan and Europe (including exposure to the United Kingdom) comprised a significant portion (i.e., in excess of 15% of the Index’s total weighting) of the Index, although the Index’s geographic exposure may change from time to time.
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WisdomTree Trust Prospectus 3 |
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Investments
in Japan
Investments in Japan are subject to risks associated with its
economy's dependence on the export market and consistent government support of
its export market. Slowdowns in the Japanese export market may have a negative
impact on the Japanese economy as a whole. Japan is also subject to risks
associated with natural disasters and escalating political tension in the
region.
Investments
in Europe
Many European countries are members of the European Union
(“EU”) as well as the European Economic and Monetary Union (“EMU”) and, as a
result, the economies and markets of European countries can be closely connected
and largely interdependent. As such, adverse events in one European country may
have effects across Europe. Investments in Europe are also subject to risks
stemming from the uncertain consequences of the United Kingdom's (“U.K.”) exit
of the EU single market and customs union (“Brexit”). Further, Russia's invasion
of the Ukraine, and the continued hostilities in the region, have caused
increased volatility in European markets and led to broad ranging economic
sanctions against Russia. Uncertainties surrounding the duration and potential
increased geographic scope of hostilities may create additional volatility in
European and global markets. Any of the above could have a negative effect on
the Fund's investments in Europe.
Investments
in the United Kingdom
Investments in the United Kingdom (“U.K.”) are
subject to risks associated with uncertainties surrounding Brexit and changes in
the economic health of its primary trade partners across Europe and the United
States. The U.K.'s economy is also heavily dependent on the export of financial
services and may be impacted by a slowdown in the financial services
sector.
4 WisdomTree Trust Prospectus |
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WisdomTree Trust Prospectus 5 |
Year | Return |
2013 | |
2014 | - |
2015 | - |
2016 | |
2017 | |
2018 | - |
2019 | |
2020 | - |
2021 | |
2022 | - |
The Fund’s
as of was .
Best and Worst Quarter Returns (for the periods reflected in the bar chart above)
Return | Quarter/Year | |
4Q/2022 | ||
1Q/2020 |
WisdomTree International Equity Fund | 1 Year | 5 Years | 10 Years |
Return Before Taxes Based on NAV | ( |
||
Return After Taxes on Distributions | ( |
( |
|
Return After Taxes on Distributions and Sale of Fund Shares | ( |
||
WisdomTree International Equity Index (Reflects no deduction for fees, expenses or taxes) | ( |
||
MSCI EAFE Index (Reflects no deduction for fees, expenses or taxes) | ( |
||
MSCI EAFE Value Index (Reflects no deduction for fees, expenses or taxes) | ( |
Management
Investment Adviser and Sub-Adviser
WisdomTree Asset Management, Inc. (“WisdomTree Asset Management” or the “Adviser”) serves as investment adviser to the Fund. Mellon Investments Corporation (the “Sub-Adviser”) serves as sub-adviser to the Fund.
6 WisdomTree Trust Prospectus |
Portfolio Managers
The Fund is managed by the Sub-Adviser’s Equity Index Strategies Portfolio Management team. The individual members of the team jointly and primarily responsible for the day-to-day management of the Fund’s portfolio are identified below.
Marlene Walker-Smith, a Director, Head of Equity Index Portfolio Management, has been a portfolio manager of the Fund since October 2020.
David France, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Todd Frysinger, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Vlasta Sheremeta, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Michael Stoll, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Buying and Selling Fund Shares
The Fund is an ETF. This means that individual shares of the Fund are listed on a national securities exchange, such as NYSE Arca, and may only be purchased and sold in the secondary market through a broker-dealer at market prices. Because Fund shares trade at market prices rather than NAV, shares may trade at a price greater than NAV (premium) or less than NAV (discount). In addition, an investor may incur costs attributable to the difference between the highest price a buyer is willing to pay to purchase shares (bid) and the lowest price a seller is willing to accept for shares (ask) when buying and selling shares in the secondary market (the “bid/ask spread”). Recent information regarding the Fund, including its NAV, market price, premiums and discounts, and bid/ask spreads, is available on the Fund’s website at www.wisdomtree.com/investments.
The Fund issues and redeems shares at NAV only in large blocks of shares (“Creation Units”), which only certain institutions or large investors (typically market makers or other broker-dealers) may purchase or redeem. The Fund issues and redeems Creation Units in exchange for a portfolio of securities and/or U.S. cash.
Tax Information
The Fund intends to make distributions that may be taxed as ordinary income, qualified dividend income, or capital gains.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank) (an “Intermediary”), WisdomTree Asset Management or its affiliates may pay Intermediaries for certain activities related to the Fund, including participation in activities that are designed to make Intermediaries more knowledgeable about exchange-traded products, including the Fund, or for other activities, such as marketing, educational training or other initiatives related to the sale or promotion of Fund shares. These payments may create a conflict of interest by influencing the Intermediary and your salesperson to recommend the Fund over another investment. Any such arrangements do not result in increased Fund expenses. Ask your salesperson or visit the Intermediary’s website for more information.
WisdomTree Trust Prospectus 7 |
The WisdomTree International High Dividend Fund (the “Fund”) seeks to track the price and yield performance, before fees and expenses, of the WisdomTree International High Dividend Index (the “Index”).
The following table describes the fees and expenses you may pay if you buy, hold and sell shares of the Fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example below. The fees are expressed as a percentage of the Fund’s average net assets.
Management Fees | |
Distribution and/or Service (12b-1) Fees | |
Other Expenses | |
Total Annual Fund Operating Expenses |
1 |
The following
example is intended to help retail investors compare the cost of investing in
the Fund with the cost of investing in other funds. It illustrates the
hypothetical expenses that such investors would incur over various periods if
they were to invest $10,000 in the Fund for the time periods indicated and then
redeem all of their shares at the end of those periods. This example assumes
that the Fund provides a return of 5% a year and that operating expenses remain
the same. This example does not include the brokerage commissions that retail
investors may pay to buy and sell shares of the Fund.
1 Year | 3 Years | 5 Years | 10 Years | |
$
|
$
|
$
|
$
|
The Fund pays
transaction costs, such as commissions, when it buys and sells securities (or
“turns over” its portfolio). A higher portfolio turnover rate may indicate
higher transaction costs and may result in higher taxes when Fund shares are
held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the example, affect the Fund’s performance. During the
most recent fiscal year, the Fund’s portfolio turnover rate was
The Fund employs a “passive management” – or indexing – investment approach designed to track the performance of the Index. The Fund generally uses a representative sampling strategy to achieve its investment objective, meaning it generally will invest in a sample of the securities in the Index whose risk, return and other characteristics resemble the risk, return and other characteristics of the Index as a whole. Under normal circumstances, at least 95% of the Fund’s total assets (exclusive of collateral held from securities lending) will be invested in component securities of the Index and investments that have economic characteristics that are substantially identical to the economic characteristics of such component securities.
The Index is a fundamentally weighted index that is comprised of companies with high dividend yields selected from the WisdomTree International Equity Index, which defines the dividend-paying universe of companies in the industrialized world, excluding Canada and the United States. To be eligible for inclusion in the Index, a company must meet the following criteria as of the annual Index screening date: (i) incorporation in one of 15 developed European countries (Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, or the United Kingdom), Israel, Japan, Australia, Hong Kong or Singapore; (ii) payment of at least $5 million in cash dividends on shares of common stock during the preceding annual cycle; (iii) market capitalization of at least $200 million; (iv) median daily dollar trading volume of at least $200,000 for the preceding three months; and (v) trading of at least 250,000 shares per month for each of the preceding six months. Securities eligible for inclusion in the Index are ranked by dividend yield as adjusted by a composite risk score based on fundamental valuation, quality and momentum characteristics. Securities ranking in the highest 30% by dividend yield and top 80% by composite risk score are selected for inclusion in the Index. If a company currently in the Index is no longer ranked in the top 30% by dividend yield at the time of the annual Index screening date but remains ranked in the top 35% by dividend yield, the company will remain in the Index.
8 WisdomTree Trust Prospectus |
Securities are weighted in the Index based on dividends paid over the prior annual cycle. Companies that pay a greater total dollar amount of dividends are more heavily weighted. To derive a company’s initial Index weight, (i) multiply the U.S. dollar value of the company’s annual gross dividend per share by the number of common shares outstanding for that company (the “Cash Dividend Factor”); (ii) calculate the Cash Dividend Factor for each company; (iii) add together all of the companies’ Cash Dividend Factors; and (iv) divide the company’s Cash Dividend Factor by the sum of all Cash Dividend Factors. At the time of the Index’s annual screening date, the maximum weight of any security in the Index is capped at 5%. On the Index’s annual screening date, the Index caps the weight of components exposed to any one country and any one sector (except for the real estate sector) at 25%. The weight of components exposed to the real estate sector is capped at 15%. The Index also may adjust the weight of individual components on the annual screening date based on certain quantitative thresholds or limits tied to key metrics of a component security, such as its trading volume. To the extent the Index reduces an individual component’s weight, the excess weight will be reallocated pro rata among the other components. Similarly, if the Index increases a component’s weight, the weight of the other components will be reduced on a pro rata basis to contribute the weight needed for such increase. The weight of a sector, country, or individual component in the Index may fluctuate above or below specified caps and thresholds, respectively, between screening dates in response to market conditions.
WisdomTree, Inc. (“WisdomTree”), as Index provider, currently uses the Global Industry Classification Standard (GICS®), a widely recognized industry classification methodology developed by MSCI, Inc. and Standard & Poor’s Financial Services LLC, to define companies within a sector. The following sectors are included in the Index: communication services, consumer discretionary, consumer staples, energy, financials, health care, industrials, information technology, materials, real estate, and utilities. A sector is comprised of multiple industries. For example, the energy sector is comprised of companies in the energy equipment and services industry as well as the oil, gas and consumable fuels industry. As of June 30, 2023, companies in the financials and materials sectors comprised a significant portion (i.e., in excess of 15% of the Index’s total weighting) of the Index; however, the Index's sector exposure may change from time to time.
As of June 30, 2023, the equity securities of companies domiciled in or otherwise tied to Australia and Europe, particularly the United Kingdom, comprised a significant portion (i.e., in excess of 15% of the Index’s total weighting) of the Index, although the Index’s geographic exposure may change from time to time.
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WisdomTree Trust Prospectus 9 |
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Investments
in Australia
The economy of Australia is heavily dependent on the price
and the demand for commodities and natural resources as well as its exports from
the energy, agricultural and mining sectors. Conditions that weaken demand for
such products worldwide could have a negative impact on the Australian economy
as a whole. Australia is also increasingly dependent on the economies of its key
trading partners, including the United States, China, Japan, South Korea, other
Asian and certain European countries.
10 WisdomTree Trust Prospectus |
Investments
in Europe
Many European countries are members of the European Union
(“EU”) as well as the European Economic and Monetary Union (“EMU”) and, as a
result, the economies and markets of European countries can be closely connected
and largely interdependent. As such, adverse events in one European country may
have effects across Europe. Investments in Europe are also subject to risks
stemming from the uncertain consequences of the United Kingdom's (“U.K.”) exit
of the EU single market and customs union (“Brexit”). Further, Russia's invasion
of the Ukraine, and the continued hostilities in the region, have caused
increased volatility in European markets and led to broad ranging economic
sanctions against Russia. Uncertainties surrounding the duration and potential
increased geographic scope of hostilities may create additional volatility in
European and global markets. Any of the above could have a negative effect on
the Fund's investments in Europe.
Investments
in the United Kingdom
Investments in the United Kingdom (“U.K.”) are
subject to risks associated with uncertainties surrounding Brexit and changes in
the economic health of its primary trade partners across Europe and the United
States. The U.K.'s economy is also heavily dependent on the export of financial
services and may be impacted by a slowdown in the financial services
sector.
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WisdomTree Trust Prospectus 11 |
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Year | Return |
2013 | |
2014 | - |
2015 | - |
2016 | |
2017 | |
2018 | - |
2019 | |
2020 | - |
2021 | |
2022 | - |
The Fund’s
as of was .
Best and Worst Quarter Returns (for the periods reflected in the bar chart above)
Return | Quarter/Year | |
4Q/2022 | ||
1Q/2020 |
WisdomTree International High Dividend Fund | 1 Year | 5 Years | 10 Years |
Return Before Taxes Based on NAV | ( |
||
Return After Taxes on Distributions | ( |
( |
|
Return After Taxes on Distributions and Sale of Fund Shares | ( |
||
WisdomTree International High Dividend Index (Reflects no deduction for fees, expenses or taxes) | ( |
||
MSCI EAFE Value Index (Reflects no deduction for fees, expenses or taxes) | ( |
12 WisdomTree Trust Prospectus |
Management
Investment Adviser and Sub-Adviser
WisdomTree Asset Management, Inc. (“WisdomTree Asset Management” or the “Adviser”) serves as investment adviser to the Fund. Mellon Investments Corporation (the “Sub-Adviser”) serves as sub-adviser to the Fund.
Portfolio Managers
The Fund is managed by the Sub-Adviser’s Equity Index Strategies Portfolio Management team. The individual members of the team jointly and primarily responsible for the day-to-day management of the Fund’s portfolio are identified below.
Marlene Walker-Smith, a Director, Head of Equity Index Portfolio Management, has been a portfolio manager of the Fund since October 2020.
David France, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Todd Frysinger, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Vlasta Sheremeta, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Michael Stoll, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Buying and Selling Fund Shares
The Fund is an ETF. This means that individual shares of the Fund are listed on a national securities exchange, such as NYSE Arca, and may only be purchased and sold in the secondary market through a broker-dealer at market prices. Because Fund shares trade at market prices rather than NAV, shares may trade at a price greater than NAV (premium) or less than NAV (discount). In addition, an investor may incur costs attributable to the difference between the highest price a buyer is willing to pay to purchase shares (bid) and the lowest price a seller is willing to accept for shares (ask) when buying and selling shares in the secondary market (the “bid/ask spread”). Recent information regarding the Fund, including its NAV, market price, premiums and discounts, and bid/ask spreads, is available on the Fund’s website at www.wisdomtree.com/investments.
The Fund issues and redeems shares at NAV only in large blocks of shares (“Creation Units”), which only certain institutions or large investors (typically market makers or other broker-dealers) may purchase or redeem. The Fund issues and redeems Creation Units in exchange for a portfolio of securities and/or U.S. cash.
Tax Information
The Fund intends to make distributions that may be taxed as ordinary income, qualified dividend income, or capital gains.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank) (an “Intermediary”), WisdomTree Asset Management or its affiliates may pay Intermediaries for certain activities related to the Fund, including participation in activities that are designed to make Intermediaries more knowledgeable about exchange-traded products, including the Fund, or for other activities, such as marketing, educational training or other initiatives related to the sale or promotion of Fund shares. These payments may create a conflict of interest by influencing the Intermediary and your salesperson to recommend the Fund over another investment. Any such arrangements do not result in increased Fund expenses. Ask your salesperson or visit the Intermediary’s website for more information.
WisdomTree Trust Prospectus 13 |
The WisdomTree International LargeCap Dividend Fund (the “Fund”) seeks to track the price and yield performance, before fees and expenses, of the WisdomTree International LargeCap Dividend Index (the “Index”).
The following table describes the fees and expenses you may pay if you buy, hold and sell shares of the Fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example below. The fees are expressed as a percentage of the Fund’s average net assets.
Management Fees | |
Distribution and/or Service (12b-1) Fees | |
Other Expenses | |
Total Annual Fund Operating Expenses |
1 |
The following
example is intended to help retail investors compare the cost of investing in
the Fund with the cost of investing in other funds. It illustrates the
hypothetical expenses that such investors would incur over various periods if
they were to invest $10,000 in the Fund for the time periods indicated and then
redeem all of their shares at the end of those periods. This example assumes
that the Fund provides a return of 5% a year and that operating expenses remain
the same. This example does not include the brokerage commissions that retail
investors may pay to buy and sell shares of the Fund.
1 Year | 3 Years | 5 Years | 10 Years | |
$
|
$
|
$
|
$
|
The Fund pays
transaction costs, such as commissions, when it buys and sells securities (or
“turns over” its portfolio). A higher portfolio turnover rate may indicate
higher transaction costs and may result in higher taxes when Fund shares are
held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the example, affect the Fund’s performance. During the
most recent fiscal year, the Fund’s portfolio turnover rate was
The Fund employs a “passive management” – or indexing – investment approach designed to track the performance of the Index. The Fund generally uses a representative sampling strategy to achieve its investment objective, meaning it generally will invest in a sample of the securities in the Index whose risk, return and other characteristics resemble the risk, return and other characteristics of the Index as a whole. Under normal circumstances, at least 95% of the Fund’s total assets (exclusive of collateral held from securities lending) will be invested in component securities of the Index and investments that have economic characteristics that are substantially identical to the economic characteristics of such component securities.
The Index is a fundamentally weighted index that is comprised of the large-capitalization segment of the dividend-paying market in the industrialized world outside the U.S. and Canada. Constituent companies are selected from the WisdomTree International Equity Index, which defines the dividend-paying universe of companies in the industrialized world, excluding Canada and the United States. The Index is comprised of the 300 largest companies ranked by market capitalization from the WisdomTree International Equity Index, as of the annual Index screening date. As of June 30, 2023, the Index had a market capitalization range from $2.8 billion to $466.3 billion, with an average market capitalization of $51.7 billion. To be eligible for inclusion in the Index, a company must meet the following criteria as of the annual Index screening date: (i) incorporation in one of 15 developed European countries (Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, or the United Kingdom), Israel, Japan, Australia, Hong Kong or Singapore; (ii) payment of at least $5 million in cash dividends on shares of common stock during the preceding annual cycle; (iii) market capitalization of at least $100 million; (iv) median daily dollar trading volume of at least $100,000 for the preceding three months; and (v) trading of at least 250,000 shares per month for each of the preceding six months.
14 WisdomTree Trust Prospectus |
Securities are weighted in the Index based on dividends paid over the prior annual cycle. Companies that pay a greater total dollar amount of dividends are more heavily weighted. To derive a company’s initial Index weight, (i) multiply the U.S. dollar value of the company’s annual gross dividend per share by the number of common shares outstanding for that company (the “Cash Dividend Factor”); (ii) calculate the Cash Dividend Factor for each company; (iii) add together all of the companies’ Cash Dividend Factors; and (iv) divide the company’s Cash Dividend Factor by the sum of all Cash Dividend Factors. On the Index’s annual screening date, the Index caps the weight of components exposed to any one country and any one sector (except for the real estate sector) at 25%. The weight of components exposed to the real estate sector is capped at 15%. The Index also may adjust the weight of individual components on the annual screening date based on certain quantitative thresholds or limits tied to key metrics of a component security, such as its trading volume. To the extent the Index reduces an individual component’s weight, the excess weight will be reallocated pro rata among the other components. Similarly, if the Index increases a component’s weight, the weight of the other components will be reduced on a pro rata basis to contribute the weight needed for such increase. The weight of a sector, country, or individual component in the Index may fluctuate above or below specified caps and thresholds, respectively, between screening dates in response to market conditions.
WisdomTree, Inc. (“WisdomTree”), as Index provider, currently uses the Global Industry Classification Standard (GICS®), a widely recognized industry classification methodology developed by MSCI, Inc. and Standard & Poor’s Financial Services LLC, to define companies within a sector. The following sectors are included in the Index: communication services, consumer discretionary, consumer staples, energy, financials, health care, industrials, information technology, materials, real estate, and utilities. A sector is comprised of multiple industries. For example, the energy sector is comprised of companies in the energy equipment and services industry as well as the oil, gas and consumable fuels industry. As of June 30, 2023, companies in the financials sector comprised a significant portion (i.e., in excess of 15% of the Index’s total weighting) of the Index; however, the Index's sector exposure may change from time to time.
As of June 30, 2023, the equity securities of companies domiciled in or otherwise tied to Japan and Europe, particularly the United Kingdom, comprised a significant portion (i.e., in excess of 15% of the Index’s total weighting) of the Index, although the Index’s geographic exposure may change from time to time.
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WisdomTree Trust Prospectus 15 |
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Investments
in Japan
Investments in Japan are subject to risks associated with its
economy's dependence on the export market and consistent government support of
its export market. Slowdowns in the Japanese export market may have a negative
impact on the Japanese economy as a whole. Japan is also subject to risks
associated with natural disasters and escalating political tension in the
region.
16 WisdomTree Trust Prospectus |
Investments
in Europe
Many European countries are members of the European Union
(“EU”) as well as the European Economic and Monetary Union (“EMU”) and, as a
result, the economies and markets of European countries can be closely connected
and largely interdependent. As such, adverse events in one European country may
have effects across Europe. Investments in Europe are also subject to risks
stemming from the uncertain consequences of the United Kingdom's (“U.K.”) exit
of the EU single market and customs union (“Brexit”). Further, Russia's invasion
of the Ukraine, and the continued hostilities in the region, have caused
increased volatility in European markets and led to broad ranging economic
sanctions against Russia. Uncertainties surrounding the duration and potential
increased geographic scope of hostilities may create additional volatility in
European and global markets. Any of the above could have a negative effect on
the Fund's investments in Europe.
Investments
in the United Kingdom
Investments in the United Kingdom (“U.K.”) are
subject to risks associated with uncertainties surrounding Brexit and changes in
the economic health of its primary trade partners across Europe and the United
States. The U.K.'s economy is also heavily dependent on the export of financial
services and may be impacted by a slowdown in the financial services
sector.
■ | |
■ | |
■ | |
■ | |
■ | |
■ |
WisdomTree Trust Prospectus 17 |
Year | Return |
2013 | |
2014 | - |
2015 | - |
2016 | |
2017 | |
2018 | - |
2019 | |
2020 | - |
2021 | |
2022 | - |
The Fund’s
as of was .
Best and Worst Quarter Returns (for the periods reflected in the bar chart above)
Return | Quarter/Year | |
4Q/2022 | ||
1Q/2020 |
WisdomTree International LargeCap Dividend Fund | 1 Year | 5 Years | 10 Years |
Return Before Taxes Based on NAV | ( |
||
Return After Taxes on Distributions | ( |
||
Return After Taxes on Distributions and Sale of Fund Shares | ( |
||
WisdomTree International LargeCap Dividend Index (Reflects no deduction for fees, expenses or taxes) | ( |
||
MSCI EAFE Index (Reflects no deduction for fees, expenses or taxes) | ( |
||
MSCI EAFE Value Index (Reflects no deduction for fees, expenses or taxes) | ( |
Management
Investment Adviser and Sub-Adviser
WisdomTree Asset Management, Inc. (“WisdomTree Asset Management” or the “Adviser”) serves as investment adviser to the Fund. Mellon Investments Corporation (the “Sub-Adviser”) serves as sub-adviser to the Fund.
18 WisdomTree Trust Prospectus |
Portfolio Managers
The Fund is managed by the Sub-Adviser’s Equity Index Strategies Portfolio Management team. The individual members of the team jointly and primarily responsible for the day-to-day management of the Fund’s portfolio are identified below.
Marlene Walker-Smith, a Director, Head of Equity Index Portfolio Management, has been a portfolio manager of the Fund since October 2020.
David France, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Todd Frysinger, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Vlasta Sheremeta, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Michael Stoll, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Buying and Selling Fund Shares
The Fund is an ETF. This means that individual shares of the Fund are listed on a national securities exchange, such as NYSE Arca, and may only be purchased and sold in the secondary market through a broker-dealer at market prices. Because Fund shares trade at market prices rather than NAV, shares may trade at a price greater than NAV (premium) or less than NAV (discount). In addition, an investor may incur costs attributable to the difference between the highest price a buyer is willing to pay to purchase shares (bid) and the lowest price a seller is willing to accept for shares (ask) when buying and selling shares in the secondary market (the “bid/ask spread”). Recent information regarding the Fund, including its NAV, market price, premiums and discounts, and bid/ask spreads, is available on the Fund’s website at www.wisdomtree.com/investments.
The Fund issues and redeems shares at NAV only in large blocks of shares (“Creation Units”), which only certain institutions or large investors (typically market makers or other broker-dealers) may purchase or redeem. The Fund issues and redeems Creation Units in exchange for a portfolio of securities and/or U.S. cash.
Tax Information
The Fund intends to make distributions that may be taxed as ordinary income, qualified dividend income, or capital gains.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank) (an “Intermediary”), WisdomTree Asset Management or its affiliates may pay Intermediaries for certain activities related to the Fund, including participation in activities that are designed to make Intermediaries more knowledgeable about exchange-traded products, including the Fund, or for other activities, such as marketing, educational training or other initiatives related to the sale or promotion of Fund shares. These payments may create a conflict of interest by influencing the Intermediary and your salesperson to recommend the Fund over another investment. Any such arrangements do not result in increased Fund expenses. Ask your salesperson or visit the Intermediary’s website for more information.
WisdomTree Trust Prospectus 19 |
The WisdomTree International MidCap Dividend Fund (the “Fund”) seeks to track the price and yield performance, before fees and expenses, of the WisdomTree International MidCap Dividend Index (the “Index”).
The following table describes the fees and expenses you may pay if you buy, hold and sell shares of the Fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example below. The fees are expressed as a percentage of the Fund’s average net assets.
Management Fees | |
Distribution and/or Service (12b-1) Fees | |
Other Expenses | |
Total Annual Fund Operating Expenses |
1 |
The following
example is intended to help retail investors compare the cost of investing in
the Fund with the cost of investing in other funds. It illustrates the
hypothetical expenses that such investors would incur over various periods if
they were to invest $10,000 in the Fund for the time periods indicated and then
redeem all of their shares at the end of those periods. This example assumes
that the Fund provides a return of 5% a year and that operating expenses remain
the same. This example does not include the brokerage commissions that retail
investors may pay to buy and sell shares of the Fund.
1 Year | 3 Years | 5 Years | 10 Years | |
$
|
$
|
$
|
$
|
The Fund pays
transaction costs, such as commissions, when it buys and sells securities (or
“turns over” its portfolio). A higher portfolio turnover rate may indicate
higher transaction costs and may result in higher taxes when Fund shares are
held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the example, affect the Fund’s performance. During the
most recent fiscal year, the Fund’s portfolio turnover rate was
The Fund employs a “passive management” – or indexing – investment approach designed to track the performance of the Index. The Fund generally uses a representative sampling strategy to achieve its investment objective, meaning it generally will invest in a sample of the securities in the Index whose risk, return and other characteristics resemble the risk, return and other characteristics of the Index as a whole. Under normal circumstances, at least 95% of the Fund’s total assets (exclusive of collateral held from securities lending) will be invested in component securities of the Index and investments that have economic characteristics that are substantially identical to the economic characteristics of such component securities.
The Index is a fundamentally weighted index that is comprised of the mid-capitalization segment of the dividend-paying market in the industrialized world outside the U.S. and Canada. Constituent companies are selected from the WisdomTree International Equity Index, which defines the dividend-paying universe of companies in the industrialized world, excluding Canada and the United States. The Index is comprised of the companies that compose the top 75% of the market capitalization of the WisdomTree International Equity Index, as of the annual Index screening date, after the 300 largest companies have been removed. As of June 30, 2023, the Index had a market capitalization range from $1.4 billion to $52.8 billion, with an average market capitalization of $6.2 billion.
20 WisdomTree Trust Prospectus |
To be eligible for inclusion in the Index, a company must meet the following criteria as of the annual Index screening date: (i) incorporation in one of 15 developed European countries (Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, or the United Kingdom), Israel, Japan, Australia, Hong Kong or Singapore; (ii) payment of at least $5 million in cash dividends on shares of common stock during the preceding annual cycle; (iii) market capitalization of at least $100 million; (iv) median daily dollar trading volume of at least $100,000 for the preceding three months; and (v) trading of at least 250,000 shares per month for each of the preceding six months.
Securities are weighted in the Index based on dividends paid over the prior annual cycle. Companies that pay a greater total dollar amount of dividends are more heavily weighted. To derive a company’s initial Index weight, (i) multiply the U.S. dollar value of the company’s annual gross dividend per share by the number of common shares outstanding for that company (the “Cash Dividend Factor”); (ii) calculate the Cash Dividend Factor for each company; (iii) add together all of the companies’ Cash Dividend Factors; and (iv) divide the company’s Cash Dividend Factor by the sum of all Cash Dividend Factors. On the Index’s annual screening date, the Index caps the weight of components exposed to any one country and any one sector (except for the real estate sector) at 25%. The weight of components exposed to the real estate sector is capped at 15%. The Index also may adjust the weight of individual components on the annual screening date based on certain quantitative thresholds or limits tied to key metrics of a component security, such as its trading volume. To the extent the Index reduces an individual component’s weight, the excess weight will be reallocated pro rata among the other components. Similarly, if the Index increases a component’s weight, the weight of the other components will be reduced on a pro rata basis to contribute the weight needed for such increase. The weight of a sector, country, or individual component in the Index may fluctuate above or below specified caps and thresholds, respectively, between screening dates in response to market conditions.
WisdomTree, Inc. (“WisdomTree”), as Index provider, currently uses the Global Industry Classification Standard (GICS®), a widely recognized industry classification methodology developed by MSCI, Inc. and Standard & Poor’s Financial Services LLC, to define companies within a sector. The following sectors are included in the Index: communication services, consumer discretionary, consumer staples, energy, financials, health care, industrials, information technology, materials, real estate, and utilities. A sector is comprised of multiple industries. For example, the energy sector is comprised of companies in the energy equipment and services industry as well as the oil, gas and consumable fuels industry. As of June 30, 2023, companies in the industrials and financials sectors comprised a significant portion (i.e., in excess of 15% of the Index’s total weighting) of the Index; however, the Index's sector exposure may change from time to time.
As of June 30, 2023, the equity securities of companies domiciled in or otherwise tied to Japan and Europe (including exposure to the United Kingdom) comprised a significant portion (i.e., in excess of 15% of the Index’s total weighting) of the Index, although the Index’s geographic exposure may change from time to time.
■ |
WisdomTree Trust Prospectus 21 |
■ | |
■ | |
■ | |
■ | |
■ | |
■ | |
■ | |
■ | |
■ |
Investments
in Japan
Investments in Japan are subject to risks associated with its
economy's dependence on the export market and consistent government support of
its export market. Slowdowns in the Japanese export market may have a negative
impact on the Japanese economy as a whole. Japan is also subject to risks
associated with natural disasters and escalating political tension in the
region.
22 WisdomTree Trust Prospectus |
Investments
in Europe
Many European countries are members of the European Union
(“EU”) as well as the European Economic and Monetary Union (“EMU”) and, as a
result, the economies and markets of European countries can be closely connected
and largely interdependent. As such, adverse events in one European country may
have effects across Europe. Investments in Europe are also subject to risks
stemming from the uncertain consequences of the United Kingdom's (“U.K.”) exit
of the EU single market and customs union (“Brexit”). Further, Russia's invasion
of the Ukraine, and the continued hostilities in the region, have caused
increased volatility in European markets and led to broad ranging economic
sanctions against Russia. Uncertainties surrounding the duration and potential
increased geographic scope of hostilities may create additional volatility in
European and global markets. Any of the above could have a negative effect on
the Fund's investments in Europe.
Investments
in the United Kingdom
Investments in the United Kingdom (“U.K.”) are
subject to risks associated with uncertainties surrounding Brexit and changes in
the economic health of its primary trade partners across Europe and the United
States. The U.K.'s economy is also heavily dependent on the export of financial
services and may be impacted by a slowdown in the financial services
sector.
■ | |
■ | |
■ | |
■ | |
■ | |
■ |
WisdomTree Trust Prospectus 23 |
■ |
Year | Return |
2013 | |
2014 | - |
2015 | |
2016 | |
2017 | |
2018 | - |
2019 | |
2020 | - |
2021 | |
2022 | - |
The Fund’s
as of was .
Best and Worst Quarter Returns (for the periods reflected in the bar chart above)
Return | Quarter/Year | |
4Q/2022 | ||
1Q/2020 |
WisdomTree International MidCap Dividend Fund | 1 Year | 5 Years | 10 Years |
Return Before Taxes Based on NAV | ( |
( |
|
Return After Taxes on Distributions | ( |
( |
|
Return After Taxes on Distributions and Sale of Fund Shares | ( |
( |
|
WisdomTree International MidCap Dividend Index (Reflects no deduction for fees, expenses or taxes) | ( |
( |
|
MSCI EAFE Mid Cap Index (Reflects no deduction for fees, expenses or taxes) | ( |
( |
24 WisdomTree Trust Prospectus |
WisdomTree International MidCap Dividend Fund | 1 Year | 5 Years | 10 Years |
MSCI EAFE Mid Cap Value Index (Reflects no deduction for fees, expenses or taxes) | ( |
( |
Management
Investment Adviser and Sub-Adviser
WisdomTree Asset Management, Inc. (“WisdomTree Asset Management” or the “Adviser”) serves as investment adviser to the Fund. Mellon Investments Corporation (the “Sub-Adviser”) serves as sub-adviser to the Fund.
Portfolio Managers
The Fund is managed by the Sub-Adviser’s Equity Index Strategies Portfolio Management team. The individual members of the team jointly and primarily responsible for the day-to-day management of the Fund’s portfolio are identified below.
Marlene Walker-Smith, a Director, Head of Equity Index Portfolio Management, has been a portfolio manager of the Fund since October 2020.
David France, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Todd Frysinger, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Vlasta Sheremeta, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Michael Stoll, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Buying and Selling Fund Shares
The Fund is an ETF. This means that individual shares of the Fund are listed on a national securities exchange, such as NYSE Arca, and may only be purchased and sold in the secondary market through a broker-dealer at market prices. Because Fund shares trade at market prices rather than NAV, shares may trade at a price greater than NAV (premium) or less than NAV (discount). In addition, an investor may incur costs attributable to the difference between the highest price a buyer is willing to pay to purchase shares (bid) and the lowest price a seller is willing to accept for shares (ask) when buying and selling shares in the secondary market (the “bid/ask spread”). Recent information regarding the Fund, including its NAV, market price, premiums and discounts, and bid/ask spreads, is available on the Fund’s website at www.wisdomtree.com/investments.
The Fund issues and redeems shares at NAV only in large blocks of shares (“Creation Units”), which only certain institutions or large investors (typically market makers or other broker-dealers) may purchase or redeem. The Fund issues and redeems Creation Units in exchange for a portfolio of securities and/or U.S. cash.
Tax Information
The Fund intends to make distributions that may be taxed as ordinary income, qualified dividend income, or capital gains.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank) (an “Intermediary”), WisdomTree Asset Management or its affiliates may pay Intermediaries for certain activities related to the Fund, including participation in activities that are designed to make Intermediaries more knowledgeable about exchange-traded products, including the Fund, or for other activities, such as marketing, educational training or other initiatives related to the sale or promotion of Fund shares. These payments may create a conflict of interest by influencing the Intermediary and your salesperson to recommend the Fund over another investment. Any such arrangements do not result in increased Fund expenses. Ask your salesperson or visit the Intermediary’s website for more information.
WisdomTree Trust Prospectus 25 |
The WisdomTree International SmallCap Dividend Fund (the “Fund”) seeks to track the price and yield performance, before fees and expenses, of the WisdomTree International SmallCap Dividend Index (the “Index”).
The following table describes the fees and expenses you may pay if you buy, hold and sell shares of the Fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example below. The fees are expressed as a percentage of the Fund’s average net assets.
Management Fees | |
Distribution and/or Service (12b-1) Fees | |
Other Expenses | |
Total Annual Fund Operating Expenses |
1 |
The following
example is intended to help retail investors compare the cost of investing in
the Fund with the cost of investing in other funds. It illustrates the
hypothetical expenses that such investors would incur over various periods if
they were to invest $10,000 in the Fund for the time periods indicated and then
redeem all of their shares at the end of those periods. This example assumes
that the Fund provides a return of 5% a year and that operating expenses remain
the same. This example does not include the brokerage commissions that retail
investors may pay to buy and sell shares of the Fund.
1 Year | 3 Years | 5 Years | 10 Years | |
$
|
$
|
$
|
$
|
The Fund pays
transaction costs, such as commissions, when it buys and sells securities (or
“turns over” its portfolio). A higher portfolio turnover rate may indicate
higher transaction costs and may result in higher taxes when Fund shares are
held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the example, affect the Fund’s performance. During the
most recent fiscal year, the Fund’s portfolio turnover rate was
The Fund employs a “passive management” – or indexing – investment approach designed to track the performance of the Index. The Fund generally uses a representative sampling strategy to achieve its investment objective, meaning it generally will invest in a sample of the securities in the Index whose risk, return and other characteristics resemble the risk, return and other characteristics of the Index as a whole. Under normal circumstances, at least 95% of the Fund’s total assets (exclusive of collateral held from securities lending) will be invested in component securities of the Index and investments that have economic characteristics that are substantially identical to the economic characteristics of such component securities.
The Index is a fundamentally weighted index that is comprised of the small-capitalization segment of the dividend-paying market in the industrialized world outside the U.S. and Canada. Constituent companies are selected from the WisdomTree International Equity Index, which defines the dividend-paying universe of companies in the industrialized world, excluding Canada and the United States. The Index is comprised of the companies that compose the bottom 25% of the market capitalization of the WisdomTree International Equity Index, as of the annual Index screening date, after the 300 largest companies have been removed. As of June 30, 2023, the Index had a market capitalization range from $80.8 million to $23.8 billion, with an average market capitalization of $1.1 billion. To be eligible for inclusion in the Index, a company must meet the following criteria as of the annual Index screening date: (i) incorporation in one of 15 developed European countries (Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, or the United Kingdom), Israel, Japan, Australia, Hong Kong or Singapore; (ii) payment of at least $5 million in cash dividends on shares of common stock during the preceding annual cycle; (iii) market capitalization of at least $100 million; (iv) median daily dollar trading volume of at least $100,000 for the preceding three months; and (v) trading of at least 250,000 shares per month for each of the preceding six months.
26 WisdomTree Trust Prospectus |
Securities are weighted in the Index based on dividends paid over the prior annual cycle. Companies that pay a greater total dollar amount of dividends are more heavily weighted. To derive a company’s initial Index weight, (i) multiply the U.S. dollar value of the company’s annual gross dividend per share by the number of common shares outstanding for that company (the “Cash Dividend Factor”); (ii) calculate the Cash Dividend Factor for each company; (iii) add together all of the companies’ Cash Dividend Factors; and (iv) divide the company’s Cash Dividend Factor by the sum of all Cash Dividend Factors. On the Index’s annual screening date, the Index caps the weight of components exposed to any one country and any one sector (except for the real estate sector) at 25%. The weight of components exposed to the real estate sector is capped at 15%. The Index also may adjust the weight of individual components on the annual screening date based on certain quantitative thresholds or limits tied to key metrics of a component security, such as its trading volume. To the extent the Index reduces an individual component’s weight, the excess weight will be reallocated pro rata among the other components. Similarly, if the Index increases a component’s weight, the weight of the other components will be reduced on a pro rata basis to contribute the weight needed for such increase. The weight of a sector, country, or individual component in the Index may fluctuate above or below specified caps and thresholds, respectively, between screening dates in response to market conditions.
WisdomTree, Inc. (“WisdomTree”), as Index provider, currently uses the Global Industry Classification Standard (GICS®), a widely recognized industry classification methodology developed by MSCI, Inc. and Standard & Poor’s Financial Services LLC, to define companies within a sector. The following sectors are included in the Index: communication services, consumer discretionary, consumer staples, energy, financials, health care, industrials, information technology, materials, real estate, and utilities. A sector is comprised of multiple industries. For example, the energy sector is comprised of companies in the energy equipment and services industry as well as the oil, gas and consumable fuels industry. As of June 30, 2023, companies in the industrials sector comprised a significant portion (i.e., in excess of 15% of the Index’s total weighting) of the Index; however, the Index's sector exposure may change from time to time.
As of June 30, 2023, the equity securities of companies domiciled in or otherwise tied to Japan and Europe (including exposure to the United Kingdom) comprised a significant portion (i.e., in excess of 15% of the Index’s total weighting) of the Index, although the Index’s geographic exposure may change from time to time.
■ |
WisdomTree Trust Prospectus 27 |
■ | |
■ | |
■ | |
■ | |
■ | |
■ | |
■ | |
■ |
Investments
in Japan
Investments in Japan are subject to risks associated with its
economy's dependence on the export market and consistent government support of
its export market. Slowdowns in the Japanese export market may have a negative
impact on the Japanese economy as a whole. Japan is also subject to risks
associated with natural disasters and escalating political tension in the
region.
Investments
in Europe
Many European countries are members of the European Union
(“EU”) as well as the European Economic and Monetary Union (“EMU”) and, as a
result, the economies and markets of European countries can be closely connected
and largely interdependent. As such, adverse events in one European country may
have effects across Europe. Investments in Europe are also subject to risks
stemming from the uncertain consequences of the United Kingdom's (“U.K.”) exit
of the EU single market and customs union (“Brexit”). Further, Russia's invasion
of the Ukraine, and the continued hostilities in the region, have caused
increased volatility in European markets and led to broad ranging economic
sanctions against Russia. Uncertainties surrounding the duration and potential
increased geographic scope of hostilities may create additional volatility in
European and global markets. Any of the above could have a negative effect on
the Fund's investments in Europe.
28 WisdomTree Trust Prospectus |
Investments
in the United Kingdom
Investments in the United Kingdom (“U.K.”) are
subject to risks associated with uncertainties surrounding Brexit and changes in
the economic health of its primary trade partners across Europe and the United
States. The U.K.'s economy is also heavily dependent on the export of financial
services and may be impacted by a slowdown in the financial services
sector.
■ | |
■ | |
■ | |
■ | |
■ | |
■ | |
■ |
WisdomTree Trust Prospectus 29 |
Year | Return |
2013 | |
2014 | - |
2015 | |
2016 | |
2017 | |
2018 | - |
2019 | |
2020 | - |
2021 | |
2022 | - |
The Fund’s
as of was .
Best and Worst Quarter Returns (for the periods reflected in the bar chart above)
Return | Quarter/Year | |
2Q/2020 | ||
1Q/2020 |
WisdomTree International SmallCap Dividend Fund | 1 Year | 5 Years | 10 Years |
Return Before Taxes Based on NAV | ( |
( |
|
Return After Taxes on Distributions | ( |
( |
|
Return After Taxes on Distributions and Sale of Fund Shares | ( |
( |
|
WisdomTree International SmallCap Dividend Index (Reflects no deduction for fees, expenses or taxes) | ( |
( |
|
MSCI EAFE Small Cap Index (Reflects no deduction for fees, expenses or taxes) | ( |
( |
|
MSCI EAFE Small Cap Value Index (Reflects no deduction for fees, expenses or taxes) | ( |
( |
Management
Investment Adviser and Sub-Adviser
WisdomTree Asset Management, Inc. (“WisdomTree Asset Management” or the “Adviser”) serves as investment adviser to the Fund. Mellon Investments Corporation (the “Sub-Adviser”) serves as sub-adviser to the Fund.
30 WisdomTree Trust Prospectus |
Portfolio Managers
The Fund is managed by the Sub-Adviser’s Equity Index Strategies Portfolio Management team. The individual members of the team jointly and primarily responsible for the day-to-day management of the Fund’s portfolio are identified below.
Marlene Walker-Smith, a Director, Head of Equity Index Portfolio Management, has been a portfolio manager of the Fund since October 2020.
David France, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Todd Frysinger, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Vlasta Sheremeta, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Michael Stoll, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Buying and Selling Fund Shares
The Fund is an ETF. This means that individual shares of the Fund are listed on a national securities exchange, such as NYSE Arca, and may only be purchased and sold in the secondary market through a broker-dealer at market prices. Because Fund shares trade at market prices rather than NAV, shares may trade at a price greater than NAV (premium) or less than NAV (discount). In addition, an investor may incur costs attributable to the difference between the highest price a buyer is willing to pay to purchase shares (bid) and the lowest price a seller is willing to accept for shares (ask) when buying and selling shares in the secondary market (the “bid/ask spread”). Recent information regarding the Fund, including its NAV, market price, premiums and discounts, and bid/ask spreads, is available on the Fund’s website at www.wisdomtree.com/investments.
The Fund issues and redeems shares at NAV only in large blocks of shares (“Creation Units”), which only certain institutions or large investors (typically market makers or other broker-dealers) may purchase or redeem. The Fund issues and redeems Creation Units in exchange for a portfolio of securities and/or U.S. cash.
Tax Information
The Fund intends to make distributions that may be taxed as ordinary income, qualified dividend income, or capital gains.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank) (an “Intermediary”), WisdomTree Asset Management or its affiliates may pay Intermediaries for certain activities related to the Fund, including participation in activities that are designed to make Intermediaries more knowledgeable about exchange-traded products, including the Fund, or for other activities, such as marketing, educational training or other initiatives related to the sale or promotion of Fund shares. These payments may create a conflict of interest by influencing the Intermediary and your salesperson to recommend the Fund over another investment. Any such arrangements do not result in increased Fund expenses. Ask your salesperson or visit the Intermediary’s website for more information.
WisdomTree Trust Prospectus 31 |
The WisdomTree International AI Enhanced Value Fund (the “Fund”) seeks income and capital appreciation.
The following table describes the fees and expenses you may pay if you buy, hold and sell shares of the Fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example below. The fees are expressed as a percentage of the Fund’s average net assets.
Management Fees | |
Distribution and/or Service (12b-1) Fees | |
Other Expenses | |
Total Annual Fund Operating Expenses |
1 |
The following
example is intended to help retail investors compare the cost of investing in
the Fund with the cost of investing in other funds. It illustrates the
hypothetical expenses that such investors would incur over various periods if
they were to invest $10,000 in the Fund for the time periods indicated and then
redeem all of their shares at the end of those periods. This example assumes
that the Fund provides a return of 5% a year and that operating expenses remain
the same. This example does not include the brokerage commissions that retail
investors may pay to buy and sell shares of the Fund.
1 Year | 3 Years | 5 Years | 10 Years | |
$
|
$
|
$
|
$
|
The Fund pays
transaction costs, such as commissions, when it buys and sells securities (or
“turns over” its portfolio). A higher portfolio turnover rate may indicate
higher transaction costs and may result in higher taxes when Fund shares are
held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the example, affect the Fund’s performance. During the
most recent fiscal year, the Fund’s portfolio turnover rate was
The Fund is actively managed and seeks to achieve its investment objective by investing primarily in equity securities selected from a universe of developed market equities, excluding the United States and Canada, that exhibit value characteristics (the “Parent Universe”) based on the selection results of a proprietary, quantitative artificial intelligence (“AI”) model developed by Voya Investment Management Co., LLC (“Voya IM” or the “Sub-Adviser”). AI refers to the simulation of human intelligence by machines. Machine learning is a subset of AI that refers to a machine’s ability to learn and improve from experience automatically without being explicitly programmed.
To be eligible for inclusion in the Parent Universe, a company must (i) be listed on a non-U.S. internationally recognized global stock exchange or regulated public market, (ii) have a market capitalization of at least $100 million, (iii) have an average daily volume of at least $100,000, and (iv) have an average of six months aggregate daily trading volume of 250,000 shares.
The AI model enhances the Fund’s value investing strategy by analyzing a variety of inputs, including company fundamentals and market sentiment, to select equity securities within the Parent Universe that exhibit value characteristics. The AI model seeks to self-identify persistent patterns in company data to identify those it expects to outperform, based on current and historical data spanning more than 20 years, including structured (e.g., financials) and unstructured (e.g., press releases, news articles) data.
32 WisdomTree Trust Prospectus |
The equity securities selected by the AI model typically have a lower price-to-book ratio, a lower price-to-earnings ratio, and greater free cash flow. The AI model is generally updated monthly and typically selects between 60 and 190 equity securities that exhibit strong value characteristics, such as those noted above, and have the greatest potential to achieve income and capital appreciation for inclusion in the Fund. The AI model weights the selected equities based on their overall model scores; however, the AI model limits the weight of any individual company to 6%. The Sub-Adviser oversees the AI model and generally intervenes in limited circumstances to address factors that the Sub-Adviser believes are not incorporated in the AI model, such as responding to corporate actions (e.g., mergers and acquisitions). The Sub-Adviser generally buys and sells equity securities for the Fund on a monthly basis based on the recommendations of the AI model, while also ensuring that the Fund remains in compliance with the Investment Company Act of 1940, as amended, and its rules and regulations.
As of June 30, 2023, the Fund invested a significant portion (i.e., in excess of 15%) of its assets in the equity securities of companies domiciled in or otherwise tied to, and thus had significant investment exposure to, Europe, particularly the United Kingdom, and Japan, although the Fund’s geographic exposure may change from time to time.
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WisdomTree Trust Prospectus 33 |
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■ | |
■ | |
■ | |
■ | |
■ |
Investments
in Europe
Many European countries are members of the European Union
(“EU”) as well as the European Economic and Monetary Union (“EMU”) and, as a
result, the economies and markets of European countries can be closely connected
and largely interdependent. As such, adverse events in one European country may
have effects across Europe. Investments in Europe are also subject to risks
stemming from the uncertain consequences of the United Kingdom's (“U.K.”) exit
of the EU single market and customs union (“Brexit”). Further, Russia's invasion
of the Ukraine, and the continued hostilities in the region, have caused
increased volatility in European markets and led to broad ranging economic
sanctions against Russia. Uncertainties surrounding the duration and potential
increased geographic scope of hostilities may create additional volatility in
European and global markets. Any of the above could have a negative effect on
the Fund's investments in Europe.
Investments
in the United Kingdom
Investments in the United Kingdom (“U.K.”) are
subject to risks associated with uncertainties surrounding Brexit and changes in
the economic health of its primary trade partners across Europe and the United
States. The U.K.'s economy is also heavily dependent on the export of financial
services and may be impacted by a slowdown in the financial services
sector.
34 WisdomTree Trust Prospectus |
Investments
in Japan
Investments in Japan are subject to risks associated with its
economy's dependence on the export market and consistent government support of
its export market. Slowdowns in the Japanese export market may have a negative
impact on the Japanese economy as a whole. Japan is also subject to risks
associated with natural disasters and escalating political tension in the
region.
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■ |
The Fund’s name, investment objective and strategies changed effective January 18, 2022. Fund performance prior to January 18, 2022 reflects the Fund’s investment objective and strategies when it sought to provide returns that corresponded to the performance of the WisdomTree International Dividend ex-Financials Index.
WisdomTree Trust Prospectus 35 |
Year | Return |
2013 | |
2014 | - |
2015 | - |
2016 | |
2017 | |
2018 | - |
2019 | |
2020 | - |
2021 | |
2022 | - |
The Fund’s
as of was .
Best and Worst Quarter Returns (for the periods reflected in the bar chart above)
Return | Quarter/Year | |
4Q/2022 | ||
1Q/2020 |
WisdomTree International Al Enhanced Value Fund* | 1 Year | 5 Years | 10 Years |
Return Before Taxes Based on NAV | ( |
||
Return After Taxes on Distributions | ( |
( |
|
Return After Taxes on Distributions and Sale of Fund Shares | ( |
||
MSCI EAFE Value Index (Reflects no deduction for fees, expenses or taxes) | ( |
* |
Management
Investment Adviser and Sub-Adviser
WisdomTree Asset Management, Inc. (“WisdomTree Asset Management” or the “Adviser”) serves as investment adviser to the Fund. Voya Investment Management Co., LLC (“Voya IM”) serves as sub-adviser to the Fund.
Portfolio Managers
The Fund is managed by Voya IM’s Quantitative Equities Team. The individual members of the team jointly and primarily responsible for the day-to-day management of the Fund’s portfolio are described below.
Vincent Costa, CFA, Chief Investment Officer, Equities, has been a portfolio manager of the Fund since January 2022.
Russell Shtern, CFA, Portfolio Manager, Machine Intelligence, has been a portfolio manager of the Fund since August 2023.
Buying and Selling Fund Shares
The Fund is an ETF. This means that individual shares of the Fund are listed on a national securities exchange, such as NYSE Arca, and may only be purchased and sold in the secondary market through a broker-dealer at market prices. Because Fund shares trade at market prices rather than NAV, shares may trade at a price greater than NAV (premium) or less than NAV (discount). In addition, an investor may incur costs attributable to the difference between the highest price a buyer is willing to pay to purchase shares (bid) and the lowest price a seller is willing to accept for shares (ask) when buying and selling shares in the secondary market (the “bid/ask spread”). Recent information regarding the Fund, including its NAV, market price, premiums and discounts, and bid/ask spreads, is available on the Fund’s website at www.wisdomtree.com/investments.
36 WisdomTree Trust Prospectus |
The Fund issues and redeems shares at NAV only in large blocks of shares (“Creation Units”), which only certain institutions or large investors (typically market makers or other broker-dealers) may purchase or redeem. The Fund issues and redeems Creation Units in exchange for a portfolio of securities and/or U.S. cash.
Tax Information
The Fund intends to make distributions that may be taxed as ordinary income, qualified dividend income, or capital gains.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank) (an “Intermediary”), WisdomTree Asset Management or its affiliates may pay Intermediaries for certain activities related to the Fund, including participation in activities that are designed to make Intermediaries more knowledgeable about exchange-traded products, including the Fund, or for other activities, such as marketing, educational training or other initiatives related to the sale or promotion of Fund shares. These payments may create a conflict of interest by influencing the Intermediary and your salesperson to recommend the Fund over another investment. Any such arrangements do not result in increased Fund expenses. Ask your salesperson or visit the Intermediary’s website for more information.
WisdomTree Trust Prospectus 37 |
The WisdomTree International Quality Dividend Growth Fund (the “Fund”) seeks to track the price and yield performance, before fees and expenses, of the WisdomTree International Quality Dividend Growth Index (the “Index”).
The following table describes the fees and expenses you may pay if you buy, hold and sell shares of the Fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example below. The fees are expressed as a percentage of the Fund’s average net assets.
Management Fees | |
Distribution and/or Service (12b-1) Fees | |
Other Expenses | |
Total Annual Fund Operating Expenses |
1 |
The following
example is intended to help retail investors compare the cost of investing in
the Fund with the cost of investing in other funds. It illustrates the
hypothetical expenses that such investors would incur over various periods if
they were to invest $10,000 in the Fund for the time periods indicated and then
redeem all of their shares at the end of those periods. This example assumes
that the Fund provides a return of 5% a year and that operating expenses remain
the same. This example does not include the brokerage commissions that retail
investors may pay to buy and sell shares of the Fund.
1 Year | 3 Years | 5 Years | 10 Years | |
$
|
$
|
$
|
$
|
The Fund pays
transaction costs, such as commissions, when it buys and sells securities (or
“turns over” its portfolio). A higher portfolio turnover rate may indicate
higher transaction costs and may result in higher taxes when Fund shares are
held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the example, affect the Fund’s performance. During the
most recent fiscal period, the Fund’s portfolio turnover rate was
The Fund employs a “passive management” – or indexing – investment approach designed to track the performance of the Index. The Fund generally uses a representative sampling strategy to achieve its investment objective, meaning it generally will invest in a sample of the securities in the Index whose risk, return and other characteristics resemble the risk, return and other characteristics of the Index as a whole. Under normal circumstances, at least 80% of the Fund’s total assets (exclusive of collateral held from securities lending) will be invested in component securities of the Index and investments that have economic characteristics that are substantially identical to the economic characteristics of such component securities.
The Index consists of dividend-paying common stocks with growth characteristics of companies in the industrialized world, excluding Canada and the United States. The Index is generally comprised of the 300 companies in the WisdomTree International Equity Index with the best combined rank of certain growth and quality factors, specifically: long-term earnings growth expectations, return on equity, and return on assets. The WisdomTree International Equity Index is a fundamentally weighted index that is comprised of companies that pay regular cash dividends. To be eligible for inclusion in the WisdomTree International Equity Index a company must be incorporated in and list its shares on the major stock exchange in one of 15 developed European countries (Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, or the United Kingdom), Israel, Japan, Australia, Hong Kong, or Singapore.
38 WisdomTree Trust Prospectus |
To be eligible for inclusion in the Index, a company must meet the following criteria as of the annual Index screening date: (i) payment of at least $5 million in cash dividends on common shares during the preceding annual cycle; (ii) market capitalization of at least $1 billion; (iii) an earnings yield that is greater than its dividend yield; (iv) median daily dollar trading volume of at least $100,000 for the preceding three months; and (v) trading of at least 250,000 shares per month for each of the preceding six months. Eligible companies are ranked according to a rules-based calculation based on the following three factors, weighted as follows: medium-term earnings growth expectations (50%), the historical three-year average return on equity (25%), and the historical three-year average return on assets (25%). The top 300 ranked companies are selected for inclusion in the Index.
Securities are weighted in the Index based on dividends paid over the prior annual cycle. Companies that pay a greater total dollar amount of dividends are more heavily weighted. To derive a company’s initial Index weight, (i) multiply the U.S. dollar value of the company’s annual gross dividend per share by the number of common shares outstanding for that company (the “Cash Dividend Factor”); (ii) calculate the Cash Dividend Factor for each company; (iii) add together all of the companies’ Cash Dividend Factors; and (iv) divide the company’s Cash Dividend Factor by the sum of all Cash Dividend Factors. On the Index’s annual screening date, the maximum weight of any security in the Index is capped at 5%, and the Index caps the weight of components exposed to any one country and any one sector (except for the real estate sector) at 20%. The weight of components exposed to the real estate sector is capped at 15%. The Index also may adjust the weight of individual components on the annual screening date based on certain quantitative thresholds or limits tied to key metrics of a component security, such as its trading volume. To the extent the Index reduces an individual component’s weight, the excess weight will be reallocated pro rata among the other components. Similarly, if the Index increases a component’s weight, the weight of the other components will be reduced on a pro rata basis to contribute the weight needed for such increase. The weight of a sector, country, or individual component in the Index may fluctuate above or below specified caps and thresholds, respectively, between screening dates in response to market conditions.
WisdomTree, Inc. (“WisdomTree”), as Index provider, currently uses the Global Industry Classification Standard (GICS®), a widely recognized industry classification methodology developed by MSCI, Inc. and Standard & Poor’s Financial Services LLC, to define companies within a sector. The following sectors are included in the Index: communication services, consumer discretionary, consumer staples, energy, financials, health care, industrials, information technology, materials, real estate, and utilities. A sector is comprised of multiple industries. For example, the energy sector is comprised of companies in the energy equipment and services industry as well as the oil, gas and consumable fuels industry. As of June 30, 2023, companies in the consumer discretionary, health care and consumer staples sectors comprised a significant portion (i.e., in excess of 15% of the Index’s total weighting) of the Index; however, the Index's sector exposure may change from time to time.
As of June 30, 2023, the equity securities of companies domiciled in or otherwise tied to Europe, particularly Switzerland and the United Kingdom comprised a significant portion (i.e., in excess of 15% of the Index’s total weighting) of the Index, although the Index’s geographic exposure may change from time to time.
■ |
WisdomTree Trust Prospectus 39 |
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■ | |
■ | |
■ | |
■ | |
■ | |
■ | |
■ |
40 WisdomTree Trust Prospectus |
■ |
Investments
in Europe
Many European countries are members of the European Union
(“EU”) as well as the European Economic and Monetary Union (“EMU”) and, as a
result, the economies and markets of European countries can be closely connected
and largely interdependent. As such, adverse events in one European country may
have effects across Europe. Investments in Europe are also subject to risks
stemming from the uncertain consequences of the United Kingdom's (“U.K.”) exit
of the EU single market and customs union (“Brexit”). Further, Russia's invasion
of the Ukraine, and the continued hostilities in the region, have caused
increased volatility in European markets and led to broad ranging economic
sanctions against Russia. Uncertainties surrounding the duration and potential
increased geographic scope of hostilities may create additional volatility in
European and global markets. Any of the above could have a negative effect on
the Fund's investments in Europe.
Investments
in Switzerland
The Swiss economy is heavily dependent on the economies of
the United States and other European nations as key trading partners. In
particular, Switzerland depends on international trade and exports to generate
economic growth. As a result, future changes in the price or the demand for
Swiss products or services by these trading partners, or changes in these
countries’ economies, trade regulations or currency exchange rates could
adversely impact the Swiss economy.
Investments
in the United Kingdom
Investments in the United Kingdom (“U.K.”) are
subject to risks associated with uncertainties surrounding Brexit and changes in
the economic health of its primary trade partners across Europe and the United
States. The U.K.’s economy is also heavily dependent on the export of financial
services and may be impacted by a slowdown in the financial services
sector.
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■ | |
■ |
WisdomTree Trust Prospectus 41 |
■ | |
■ | |
■ | |
■ | |
■ |
Year | Return |
2017 | |
2018 | - |
2019 | |
2020 | |
2021 | |
2022 | - |
The Fund’s
as of was .
Best and Worst Quarter Returns (for the periods reflected in the bar chart above)
Return | Quarter/Year | |
2Q/2020 |
42 WisdomTree Trust Prospectus |
Return | Quarter/Year | |
2Q/2022 |
WisdomTree International Quality Dividend Growth Fund | 1 Year | 5 Years | Since
Inception |
Return Before Taxes Based on NAV | ( |
||
Return After Taxes on Distributions | ( |
||
Return After Taxes on Distributions and Sale of Fund Shares | ( |
||
WisdomTree International Quality Dividend Growth Index (Reflects no deduction for fees, expenses or taxes) | ( |
||
MSCI EAFE Index (Reflects no deduction for fees, expenses or taxes) | ( |
Management
Investment Adviser and Sub-Adviser
WisdomTree Asset Management, Inc. (“WisdomTree Asset Management” or the “Adviser”) serves as investment adviser to the Fund. Mellon Investments Corporation (the “Sub-Adviser”) serves as sub-adviser to the Fund.
Portfolio Managers
The Fund is managed by the Sub-Adviser’s Equity Index Strategies Portfolio Management team. The individual members of the team jointly and primarily responsible for the day-to-day management of the Fund’s portfolio are identified below.
Marlene Walker-Smith, a Director, Head of Equity Index Portfolio Management, has been a portfolio manager of the Fund since October 2020.
David France, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Todd Frysinger, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Vlasta Sheremeta, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Michael Stoll, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Buying and Selling Fund Shares
The Fund is an ETF. This means that individual shares of the Fund are listed on a national securities exchange, such as Cboe BZX Exchange, Inc., and may only be purchased and sold in the secondary market through a broker-dealer at market prices. Because Fund shares trade at market prices rather than NAV, shares may trade at a price greater than NAV (premium) or less than NAV (discount). In addition, an investor may incur costs attributable to the difference between the highest price a buyer is willing to pay to purchase shares (bid) and the lowest price a seller is willing to accept for shares (ask) when buying and selling shares in the secondary market (the “bid/ask spread”). Recent information regarding the Fund, including its NAV, market price, premiums and discounts, and bid/ask spreads, is available on the Fund’s website at www.wisdomtree.com/investments.
The Fund issues and redeems shares at NAV only in large blocks of shares (“Creation Units”), which only certain institutions or large investors (typically market makers or other broker-dealers) may purchase or redeem. The Fund issues and redeems Creation Units in exchange for a portfolio of securities and/or U.S. cash.
WisdomTree Trust Prospectus 43 |
Tax Information
The Fund intends to make distributions that may be taxed as ordinary income, qualified dividend income, or capital gains.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank) (an “Intermediary”), WisdomTree Asset Management or its affiliates may pay Intermediaries for certain activities related to the Fund, including participation in activities that are designed to make Intermediaries more knowledgeable about exchange-traded products, including the Fund, or for other activities, such as marketing, educational training or other initiatives related to the sale or promotion of Fund shares. These payments may create a conflict of interest by influencing the Intermediary and your salesperson to recommend the Fund over another investment. Any such arrangements do not result in increased Fund expenses. Ask your salesperson or visit the Intermediary’s website for more information.
44 WisdomTree Trust Prospectus |
The WisdomTree International Multifactor Fund (the “Fund”) seeks capital appreciation.
The following table describes the fees and expenses you may pay if you buy, hold and sell shares of the Fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example below. The fees are expressed as a percentage of the Fund’s average net assets.
Management Fees | |
Distribution and/or Service (12b-1) Fees | |
Other Expenses | |
Total Annual Fund Operating Expenses |
1 |
The following
example is intended to help retail investors compare the cost of investing in
the Fund with the cost of investing in other funds. It illustrates the
hypothetical expenses that such investors would incur over various periods if
they were to invest $10,000 in the Fund for the time periods indicated and then
redeem all of their shares at the end of those periods. This example assumes
that the Fund provides a return of 5% a year and that operating expenses remain
the same. This example does not include the brokerage commissions that retail
investors may pay to buy and sell shares of the Fund.
1 Year | 3 Years | 5 Years | 10 Years | |
$
|
$
|
$
|
$
|
The Fund pays
transaction costs, such as commissions, when it buys and sells securities (or
“turns over” its portfolio). A higher portfolio turnover rate may indicate
higher transaction costs and may result in higher taxes when Fund shares are
held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the example, affect the Fund’s performance. During the
most recent fiscal period, the Fund’s portfolio turnover rate was
The Fund, an exchange-traded fund (“ETF”), is actively managed using a model-based approach.
The Fund seeks to achieve its investment objective by investing primarily in equity securities of developed markets, excluding the United States and Canada, that exhibit certain characteristics that the investment adviser, WisdomTree Asset Management, Inc. (“WisdomTree”), believes to be indicative of positive future returns based on a model developed by WisdomTree. WisdomTree seeks to identify equity securities of developed countries, excluding the United States and Canada, that have the highest potential for returns based on proprietary measures of fundamental factors, such as value and quality, and technical factors, such as momentum and correlation. WisdomTree employs a quantitative model to identify which securities the Fund might purchase and sell and opportune times for purchases and sales. At a minimum, the Fund’s portfolio will be rebalanced quarterly according to WisdomTree’s quantitative model, although a more active approach may be taken depending on such factors as market conditions and investment opportunities, and the number of holdings in the Fund may vary.
WisdomTree seeks to manage the Fund’s currency risk by dynamically hedging currency fluctuations in the relative value of the applicable foreign currencies against the U.S. dollar, ranging from a 0% to 100% hedge. The hedge ratios on such foreign currencies are adjusted as frequently as weekly utilizing signals such as momentum, interest rate differentials, volatility, and cross-asset returns. The Fund uses forward currency contracts and/or futures contracts to the extent foreign currencies are hedged.
WisdomTree Trust Prospectus 45 |
The Fund currently uses the Global Industry Classification Standard (GICS®), a widely recognized industry classification methodology developed by MSCI, Inc. and Standard & Poor’s Financial Services LLC, to define companies within a sector. The following sectors are included in the Fund: communication services, consumer discretionary, consumer staples, energy, financials, health care, industrials, information technology, materials, real estate, and utilities. A sector is comprised of multiple industries. For example, the energy sector is comprised of companies in the energy equipment and services industry as well as the oil, gas and consumable fuels industry. As of June 30, 2023, companies in the industrials sector comprised a significant portion (i.e., in excess of 15%) of the Fund’s assets; however, the Fund’s sector exposure may change from time to time.
As of June 30, 2023, the Fund invested a significant portion (i.e., in excess of 15%) of its assets in the equity securities of companies domiciled in or otherwise tied to, and thus had significant investment exposure to, Japan and Europe (including exposure to the United Kingdom), although the Fund’s geographic exposure may change from time to time.
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■ | |
■ | |
■ |
46 WisdomTree Trust Prospectus |
■ | |
■ | |
■ |
Investments
in Japan
Investments in Japan are subject to risks associated with its
economy's dependence on the export market and consistent government support of
its export market. Slowdowns in the Japanese export market may have a negative
impact on the Japanese economy as a whole. Japan is also subject to risks
associated with natural disasters and escalating political tension in the
region.
Investments
in Europe
Many European countries are members of the European Union
(“EU”) as well as the European Economic and Monetary Union (“EMU”) and, as a
result, the economies and markets of European countries can be closely connected
and largely interdependent. As such, adverse events in one European country may
have effects across Europe. Investments in Europe are also subject to risks
stemming from the uncertain consequences of the United Kingdom's (“U.K.”) exit
of the EU single market and customs union (“Brexit”). Further, Russia's invasion
of the Ukraine, and the continued hostilities in the region, have caused
increased volatility in European markets and led to broad ranging economic
sanctions against Russia. Uncertainties surrounding the duration and potential
increased geographic scope of hostilities may create additional volatility in
European and global markets. Any of the above could have a negative effect on
the Fund's investments in Europe.
Investments
in the United Kingdom
Investments in the United Kingdom (“U.K.”) are
subject to risks associated with uncertainties surrounding Brexit and changes in
the economic health of its primary trade partners across Europe and the United
States. The U.K.'s economy is also heavily dependent on the export of financial
services and may be impacted by a slowdown in the financial services
sector.
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WisdomTree Trust Prospectus 47 |
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■ | |
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48 WisdomTree Trust Prospectus |
Year | Return |
2019 | |
2020 | - |
2021 | |
2022 | - |
The Fund’s
as of was .
Best and Worst Quarter Returns (for the periods reflected in the bar chart above)
Return | Quarter/Year | |
2Q/2020 | ||
1Q/2020 |
WisdomTree International Multifactor Fund | 1 Year | Since
Inception |
Return Before Taxes Based on NAV | ( |
|
Return After Taxes on Distributions | ( |
|
Return After Taxes on Distributions and Sale of Fund Shares | ( |
|
MSCI EAFE Local Currency Index (Reflects no deduction for fees, expenses or taxes) | ( |
|
MSCI EAFE Index (Reflects no deduction for fees, expenses or taxes) | ( |
Management
Investment Adviser and Sub-Adviser
WisdomTree Asset Management, Inc. (“WisdomTree Asset Management” or the “Adviser”) serves as investment adviser to the Fund. Mellon Investments Corporation (the “Sub-Adviser”) serves as sub-adviser to the Fund.
WisdomTree Trust Prospectus 49 |
Portfolio Managers
The Fund is managed by the Sub-Adviser’s Equity Index Strategies Portfolio Management team. The individual members of the team jointly and primarily responsible for the day-to-day management of the Fund’s portfolio are identified below.
Marlene Walker-Smith, a Director, Head of Equity Index Portfolio Management, has been a portfolio manager of the Fund since October 2020.
David France, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Todd Frysinger, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Vlasta Sheremeta, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Michael Stoll, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Buying and Selling Fund Shares
The Fund is an ETF. This means that individual shares of the Fund are listed on a national securities exchange, such as NYSE Arca, and may only be purchased and sold in the secondary market through a broker-dealer at market prices. Because Fund shares trade at market prices rather than NAV, shares may trade at a price greater than NAV (premium) or less than NAV (discount). In addition, an investor may incur costs attributable to the difference between the highest price a buyer is willing to pay to purchase shares (bid) and the lowest price a seller is willing to accept for shares (ask) when buying and selling shares in the secondary market (the “bid/ask spread”). Recent information regarding the Fund, including its NAV, market price, premiums and discounts, and bid/ask spreads, is available on the Fund’s website at www.wisdomtree.com/investments.
The Fund issues and redeems shares at NAV only in large blocks of shares (“Creation Units”), which only certain institutions or large investors (typically market makers or other broker-dealers) may purchase or redeem. The Fund issues and redeems Creation Units in exchange for a portfolio of securities and/or U.S. cash.
Tax Information
The Fund intends to make distributions that may be taxed as ordinary income, qualified dividend income, or capital gains.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank) (an “Intermediary”), WisdomTree Asset Management or its affiliates may pay Intermediaries for certain activities related to the Fund, including participation in activities that are designed to make Intermediaries more knowledgeable about exchange-traded products, including the Fund, or for other activities, such as marketing, educational training or other initiatives related to the sale or promotion of Fund shares. These payments may create a conflict of interest by influencing the Intermediary and your salesperson to recommend the Fund over another investment. Any such arrangements do not result in increased Fund expenses. Ask your salesperson or visit the Intermediary’s website for more information.
50 WisdomTree Trust Prospectus |
The WisdomTree Europe Quality Dividend Growth Fund (the “Fund”) seeks to track the price and yield performance, before fees and expenses, of the WisdomTree Europe Quality Dividend Growth Index (the “Index”).
The following table describes the fees and expenses you may pay if you buy, hold and sell shares of the Fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example below. The fees are expressed as a percentage of the Fund’s average net assets.
Management Fees | |
Distribution and/or Service (12b-1) Fees | |
Other Expenses | |
Total Annual Fund Operating Expenses |
1 |
The following
example is intended to help retail investors compare the cost of investing in
the Fund with the cost of investing in other funds. It illustrates the
hypothetical expenses that such investors would incur over various periods if
they were to invest $10,000 in the Fund for the time periods indicated and then
redeem all of their shares at the end of those periods. This example assumes
that the Fund provides a return of 5% a year and that operating expenses remain
the same. This example does not include the brokerage commissions that retail
investors may pay to buy and sell shares of the Fund.
1 Year | 3 Years | 5 Years | 10 Years | |
$
|
$
|
$
|
$
|
The Fund pays
transaction costs, such as commissions, when it buys and sells securities (or
“turns over” its portfolio). A higher portfolio turnover rate may indicate
higher transaction costs and may result in higher taxes when Fund shares are
held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the example, affect the Fund’s performance. During the
most recent fiscal year, the Fund’s portfolio turnover rate was
The Fund employs a “passive management” – or indexing – investment approach designed to track the performance of the Index. The Fund generally uses a representative sampling strategy to achieve its investment objective, meaning it generally will invest in a sample of the securities in the Index whose risk, return and other characteristics resemble the risk, return and other characteristics of the Index as a whole. Under normal circumstances, at least 80% of the Fund’s total assets (exclusive of collateral held from securities lending) will be invested in component securities of the Index and investments that have economic characteristics that are substantially identical to the economic characteristics of such component securities.
The Index consists of dividend-paying common stocks of companies with growth characteristics that are incorporated and listed on a stock exchange in one of the following countries: Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland or the United Kingdom. The Index is a fundamentally weighted index that is generally comprised of the 300 companies with the best combined rank of certain growth and quality factors, specifically: medium-term earnings growth expectations, return on equity, and return on assets. To be eligible for inclusion in the Index, a company must meet the following criteria as of the annual Index screening date: (i) payment of at least $5 million in cash dividends on common shares during the preceding annual cycle; (ii) market capitalization of at least $1 billion; (iii) median daily dollar trading volume of at least $200,000 for each of the preceding three months; (iv) trading of at least 250,000 shares per month for each of the preceding six months; and (v) an earnings yield greater than the dividend yield.
WisdomTree Trust Prospectus 51 |
Securities are weighted in the Index based on dividends paid over the prior annual cycle. Companies that pay a greater total dollar amount of dividends are more heavily weighted. To derive a company’s initial Index weight, (i) multiply the U.S. dollar value of the company’s annual gross dividend per share by the number of common shares outstanding for that company (the “Cash Dividend Factor”); (ii) calculate the Cash Dividend Factor for each company; (iii) add together all of the companies’ Cash Dividend Factors; and (iv) divide the company’s Cash Dividend Factor by the sum of all Cash Dividend Factors. On the Index’s annual screening date, the maximum weight of any security in the Index is capped at 5%, and the Index caps the weight of components exposed to any one country at 25% and any one sector (except for the real estate sector) at 20%. The weight of components exposed to the real estate sector is capped at 15%. The Index also may adjust the weight of individual components on the annual screening date based on certain quantitative thresholds or limits tied to key metrics of a component security, such as its trading volume. To the extent the Index reduces an individual component’s weight, the excess weight will be reallocated pro rata among the other components. Similarly, if the Index increases a component’s weight, the weight of the other components will be reduced on a pro rata basis to contribute the weight needed for such increase. The weight of a sector, country, or individual component in the Index may fluctuate above or below specified caps and thresholds, respectively, between screening dates in response to market conditions.
WisdomTree, Inc. (“WisdomTree”), as Index provider, currently uses the Global Industry Classification Standard (GICS®), a widely recognized industry classification methodology developed by MSCI, Inc. and Standard & Poor’s Financial Services LLC, to define companies within a sector. The following sectors are included in the Index: communication services, consumer discretionary, consumer staples, energy, financials, health care, industrials, information technology, materials, real estate, and utilities. A sector is comprised of multiple industries. For example, the energy sector is comprised of companies in the energy equipment and services industry as well as the oil, gas and consumable fuels industry. As of June 30, 2023, companies in the health care, consumer staples, industrials and consumer discretionary sectors comprised a significant portion (i.e., in excess of 15% of the Index’s total weighting) of the Index; however, the Index's sector exposure may change from time to time.
As of June 30, 2023, the equity securities of companies domiciled in or otherwise tied to France, Switzerland and the United Kingdom comprised a significant portion (i.e., in excess of 15% of the Index’s total weighting) of the Index, although the Index’s geographic exposure may change from time to time.
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52 WisdomTree Trust Prospectus |
Investments
in the United Kingdom
Investments in the United Kingdom (“U.K.”) are
subject to risks associated with uncertainties surrounding Brexit and changes in
the economic health of its primary trade partners across Europe and the United
States. The U.K.’s economy is also heavily dependent on the export of financial
services and may be impacted by a slowdown in the financial services
sector.
Investments
in Switzerland
The Swiss economy is heavily dependent on the economies of
the United States and other European nations as key trading partners. In
particular, Switzerland depends on international trade and exports to generate
economic growth. As a result, future changes in the price or the demand for
Swiss products or services by these trading partners, or changes in these
countries’ economies, trade regulations or currency exchange rates could
adversely impact the Swiss economy.
Investments
in France
France’s economy is dependent on its agricultural exports and
fluctuations in the demand for agricultural products may have negative impacts
on France’s economy. The United Kingdom’s (“U.K.”) exit from the European Union
may adversely impact France’s economy due to decreased demand for French exports
in the U.K. France has experienced several terrorist attacks over the past
several years, creating a climate of insecurity that has been detrimental to
tourism.
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WisdomTree Trust Prospectus 53 |
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54 WisdomTree Trust Prospectus |
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WisdomTree Trust Prospectus 55 |
Year | Return |
2015 | |
2016 | - |
2017 | |
2018 | - |
2019 | |
2020 | |
2021 | |
2022 | - |
The Fund’s
as of was .
Best and Worst Quarter Returns (for the periods reflected in the bar chart above)
Return | Quarter/Year | |
4Q/2022 | ||
1Q/2020 |
WisdomTree Europe Quality Dividend Growth Fund | 1 Year | 5 Years | Since
Inception |
Return Before Taxes Based on NAV | ( |
||
Return After Taxes on Distributions | ( |
||
Return After Taxes on Distributions and Sale of Fund Shares | ( |
||
WisdomTree Europe Quality Dividend Growth Index (Reflects no deduction for fees, expenses or taxes) | ( |
||
MSCI Europe Index (Reflects no deduction for fees, expenses or taxes) | ( |
Management
Investment Adviser and Sub-Adviser
WisdomTree Asset Management, Inc. (“WisdomTree Asset Management” or the “Adviser”) serves as investment adviser to the Fund. Mellon Investments Corporation (the “Sub-Adviser”) serves as sub-adviser to the Fund.
Portfolio Managers
The Fund is managed by the Sub-Adviser’s Equity Index Strategies Portfolio Management team. The individual members of the team jointly and primarily responsible for the day-to-day management of the Fund’s portfolio are identified below.
Marlene Walker-Smith, a Director, Head of Equity Index Portfolio Management, has been a portfolio manager of the Fund since October 2020.
David France, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Todd Frysinger, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Vlasta Sheremeta, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
56 WisdomTree Trust Prospectus |
Michael Stoll, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Buying and Selling Fund Shares
The Fund is an ETF. This means that individual shares of the Fund are listed on a national securities exchange, such as NYSE Arca, and may only be purchased and sold in the secondary market through a broker-dealer at market prices. Because Fund shares trade at market prices rather than NAV, shares may trade at a price greater than NAV (premium) or less than NAV (discount). In addition, an investor may incur costs attributable to the difference between the highest price a buyer is willing to pay to purchase shares (bid) and the lowest price a seller is willing to accept for shares (ask) when buying and selling shares in the secondary market (the “bid/ask spread”). Recent information regarding the Fund, including its NAV, market price, premiums and discounts, and bid/ask spreads, is available on the Fund’s website at www.wisdomtree.com/investments.
The Fund issues and redeems shares at NAV only in large blocks of shares (“Creation Units”), which only certain institutions or large investors (typically market makers or other broker-dealers) may purchase or redeem. The Fund issues and redeems Creation Units in exchange for a portfolio of securities and/or U.S. cash.
Tax Information
The Fund intends to make distributions that may be taxed as ordinary income, qualified dividend income, or capital gains.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank) (an “Intermediary”), WisdomTree Asset Management or its affiliates may pay Intermediaries for certain activities related to the Fund, including participation in activities that are designed to make Intermediaries more knowledgeable about exchange-traded products, including the Fund, or for other activities, such as marketing, educational training or other initiatives related to the sale or promotion of Fund shares. These payments may create a conflict of interest by influencing the Intermediary and your salesperson to recommend the Fund over another investment. Any such arrangements do not result in increased Fund expenses. Ask your salesperson or visit the Intermediary’s website for more information.
WisdomTree Trust Prospectus 57 |
The WisdomTree Europe SmallCap Dividend Fund (the “Fund”) seeks to track the price and yield performance, before fees and expenses, of the WisdomTree Europe SmallCap Dividend Index (the “Index”).
The following table describes the fees and expenses you may pay if you buy, hold and sell shares of the Fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example below. The fees are expressed as a percentage of the Fund’s average net assets.
Management Fees | |
Distribution and/or Service (12b-1) Fees | |
Other Expenses | |
Total Annual Fund Operating Expenses |
1 |
The following
example is intended to help retail investors compare the cost of investing in
the Fund with the cost of investing in other funds. It illustrates the
hypothetical expenses that such investors would incur over various periods if
they were to invest $10,000 in the Fund for the time periods indicated and then
redeem all of their shares at the end of those periods. This example assumes
that the Fund provides a return of 5% a year and that operating expenses remain
the same. This example does not include the brokerage commissions that retail
investors may pay to buy and sell shares of the Fund.
1 Year | 3 Years | 5 Years | 10 Years | |
$
|
$
|
$
|
$
|
The Fund pays
transaction costs, such as commissions, when it buys and sells securities (or
“turns over” its portfolio). A higher portfolio turnover rate may indicate
higher transaction costs and may result in higher taxes when Fund shares are
held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the example, affect the Fund’s performance. During the
most recent fiscal year, the Fund’s portfolio turnover rate was
The Fund employs a “passive management” – or indexing – investment approach designed to track the performance of the Index. The Fund generally uses a representative sampling strategy to achieve its investment objective, meaning it generally will invest in a sample of the securities in the Index whose risk, return and other characteristics resemble the risk, return and other characteristics of the Index as a whole. Under normal circumstances, at least 95% of the Fund’s total assets (exclusive of collateral held from securities lending) will be invested in component securities of the Index and investments that have economic characteristics that are substantially identical to the economic characteristics of such component securities.
The Index is a fundamentally weighted index that is comprised of the small-capitalization segment of the European dividend-paying market. Constituent companies are selected from the WisdomTree Europe Dividend Index, which defines the dividend-paying universe of companies in Europe. The Index is comprised of the companies that compose the bottom 25% (bottom 30% with respect to a company to be deleted) of the market capitalization of the WisdomTree Europe Dividend Index after the 300 largest companies have been removed. As of June 30, 2023, the Index had a market capitalization range from $98.7 million to $23.8 billion, with an average market capitalization of $1.1 billion. To be eligible for inclusion in the WisdomTree Europe Dividend Index, a company must meet the following criteria as of the annual Index screening date: (i) incorporation and exchange listing in one of the following countries: Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, or the United Kingdom (“Europe”); (ii) payment of at least $5 million in cash dividends on common shares during the preceding annual cycle; (iii) market capitalization of at least $100 million; (iv) median daily dollar trading volume of at least $100,000 for the preceding three months; and (v) trading of at least 250,000 shares per month for each of the preceding six months.
58 WisdomTree Trust Prospectus |
Securities are weighted in the Index based on dividends paid over the prior annual cycle. Companies that pay a greater total dollar amount of dividends are more heavily weighted. To derive a company’s initial Index weight, (i) multiply the U.S. dollar value of the company’s annual gross dividend per share by the number of common shares outstanding for that company (the “Cash Dividend Factor”); (ii) calculate the Cash Dividend Factor for each company; (iii) add together all of the companies’ Cash Dividend Factors; and (iv) divide the company’s Cash Dividend Factor by the sum of all Cash Dividend Factors. On the Index’s annual screening date, the Index caps the weight of components exposed to any one country and any one sector (except for the real estate sector) at 25%. The weight of components exposed to the real estate sector is capped at 15%. The Index also may adjust the weight of individual components on the annual screening date based on certain quantitative thresholds or limits tied to key metrics of a component security, such as its trading volume. To the extent the Index reduces an individual component’s weight, the excess weight will be reallocated pro rata among the other components. Similarly, if the Index increases a component’s weight, the weight of the other components will be reduced on a pro rata basis to contribute the weight needed for such increase. The weight of a sector, country, or individual component in the Index may fluctuate above or below specified caps and thresholds, respectively, between screening dates in response to market conditions.
WisdomTree, Inc. (“WisdomTree”), as Index provider, currently uses the Global Industry Classification Standard (GICS®), a widely recognized industry classification methodology developed by MSCI, Inc. and Standard & Poor’s Financial Services LLC, to define companies within a sector. The following sectors are included in the Index: communication services, consumer discretionary, consumer staples, energy, financials, health care, industrials, information technology, materials, real estate, and utilities. A sector is comprised of multiple industries. For example, the energy sector is comprised of companies in the energy equipment and services industry as well as the oil, gas and consumable fuels industry. As of June 30, 2023, companies in the industrials and consumer discretionary sectors comprised a significant portion (i.e., in excess of 15% of the Index’s total weighting) of the Index; however, the Index's sector exposure may change from time to time.
As of June 30, 2023, the equity securities of companies domiciled in or otherwise tied to the United Kingdom and Sweden comprised a significant portion (i.e., in excess of 15% of the Index’s total weighting) of the Index, although the Index’s geographic exposure may change from time to time.
■ |
WisdomTree Trust Prospectus 59 |
Investments
in the United Kingdom
Investments in the United Kingdom (“U.K.”) are
subject to risks associated with uncertainties surrounding Brexit and changes in
the economic health of its primary trade partners across Europe and the United
States. The U.K.’s economy is also heavily dependent on the export of financial
services and may be impacted by a slowdown in the financial services
sector.
Investments
in Sweden
Sweden’s largest trading partners include the United States,
Germany and certain other Western European nations. As a result, the economy of
Sweden may be significantly affected by changes in the economies, trade
regulations, currency exchange rates, and monetary policies of these trading
partners. In addition, Sweden maintains a robust social welfare system, and
Sweden’s workforce is highly unionized. These factors can negatively impact the
Swedish economy by causing increased government spending, higher production
costs and lower productivity, among other things.
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60 WisdomTree Trust Prospectus |
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WisdomTree Trust Prospectus 61 |
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Year | Return |
2013 | |
2014 | - |
2015 | |
2016 | |
2017 | |
2018 | - |
2019 | |
2020 | |
2021 | |
2022 | - |
The Fund’s
as of was .
Best and Worst Quarter Returns (for the periods reflected in the bar chart above)
Return | Quarter/Year | |
4Q/2020 | ||
1Q/2020 |
62 WisdomTree Trust Prospectus |
WisdomTree Europe SmallCap Dividend Fund | 1 Year | 5 Years | 10 Years |
Return Before Taxes Based on NAV | ( |
( |
|
Return After Taxes on Distributions | ( |
( |
|
Return After Taxes on Distributions and Sale of Fund Shares | ( |
( |
|
WisdomTree Europe SmallCap Dividend Index (Reflects no deduction for fees, expenses or taxes) | ( |
( |
|
MSCI Europe Small Cap Index (Reflects no deduction for fees, expenses or taxes) | ( |
( |
Management
Investment Adviser and Sub-Adviser
WisdomTree Asset Management, Inc. (“WisdomTree Asset Management” or the “Adviser”) serves as investment adviser to the Fund. Mellon Investments Corporation (the “Sub-Adviser”) serves as sub-adviser to the Fund.
Portfolio Managers
The Fund is managed by the Sub-Adviser’s Equity Index Strategies Portfolio Management team. The individual members of the team jointly and primarily responsible for the day-to-day management of the Fund’s portfolio are identified below.
Marlene Walker-Smith, a Director, Head of Equity Index Portfolio Management, has been a portfolio manager of the Fund since October 2020.
David France, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Todd Frysinger, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Vlasta Sheremeta, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Michael Stoll, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Buying and Selling Fund Shares
The Fund is an ETF. This means that individual shares of the Fund are listed on a national securities exchange, such as NYSE Arca, and may only be purchased and sold in the secondary market through a broker-dealer at market prices. Because Fund shares trade at market prices rather than NAV, shares may trade at a price greater than NAV (premium) or less than NAV (discount). In addition, an investor may incur costs attributable to the difference between the highest price a buyer is willing to pay to purchase shares (bid) and the lowest price a seller is willing to accept for shares (ask) when buying and selling shares in the secondary market (the “bid/ask spread”). Recent information regarding the Fund, including its NAV, market price, premiums and discounts, and bid/ask spreads, is available on the Fund’s website at www.wisdomtree.com/investments.
The Fund issues and redeems shares at NAV only in large blocks of shares (“Creation Units”), which only certain institutions or large investors (typically market makers or other broker-dealers) may purchase or redeem. The Fund issues and redeems Creation Units in exchange for a portfolio of securities and/or U.S. cash.
Tax Information
The Fund intends to make distributions that may be taxed as ordinary income, qualified dividend income, or capital gains.
WisdomTree Trust Prospectus 63 |
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank) (an “Intermediary”), WisdomTree Asset Management or its affiliates may pay Intermediaries for certain activities related to the Fund, including participation in activities that are designed to make Intermediaries more knowledgeable about exchange-traded products, including the Fund, or for other activities, such as marketing, educational training or other initiatives related to the sale or promotion of Fund shares. These payments may create a conflict of interest by influencing the Intermediary and your salesperson to recommend the Fund over another investment. Any such arrangements do not result in increased Fund expenses. Ask your salesperson or visit the Intermediary’s website for more information.
64 WisdomTree Trust Prospectus |
The WisdomTree Japan SmallCap Dividend Fund (the “Fund”) seeks to track the price and yield performance, before fees and expenses, of the WisdomTree Japan SmallCap Dividend Index (the “Index”).
The following table describes the fees and expenses you may pay if you buy, hold and sell shares of the Fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example below. The fees are expressed as a percentage of the Fund’s average net assets.
Management Fees | |
Distribution and/or Service (12b-1) Fees | |
Other Expenses | |
Total Annual Fund Operating Expenses |
The following
example is intended to help retail investors compare the cost of investing in
the Fund with the cost of investing in other funds. It illustrates the
hypothetical expenses that such investors would incur over various periods if
they were to invest $10,000 in the Fund for the time periods indicated and then
redeem all of their shares at the end of those periods. This example assumes
that the Fund provides a return of 5% a year and that operating expenses remain
the same. This example does not include the brokerage commissions that retail
investors may pay to buy and sell shares of the Fund.
1 Year | 3 Years | 5 Years | 10 Years | |
$
|
$
|
$
|
$
|
The Fund pays
transaction costs, such as commissions, when it buys and sells securities (or
“turns over” its portfolio). A higher portfolio turnover rate may indicate
higher transaction costs and may result in higher taxes when Fund shares are
held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the example, affect the Fund’s performance. During the
most recent fiscal year, the Fund’s portfolio turnover rate was
The Fund employs a “passive management” – or indexing – investment approach designed to track the performance of the Index. The Fund generally uses a representative sampling strategy to achieve its investment objective, meaning it generally will invest in a sample of the securities in the Index whose risk, return and other characteristics resemble the risk, return and other characteristics of the Index as a whole. Under normal circumstances, at least 95% of the Fund’s total assets (exclusive of collateral held from securities lending) will be invested in component securities of the Index and investments that have economic characteristics that are substantially identical to the economic characteristics of such component securities.
The Index is a fundamentally weighted index that is comprised of dividend-paying small capitalization companies in Japan. As of June 30, 2023, the Index had a market capitalization range from $83.6 million to $3.6 billion, with an average market capitalization of $846.8 million. To be eligible for inclusion in the Index, a company must meet the following criteria as of the annual Index screening date: (i) incorporation in Japan; (ii) payment of at least $5 million in cash dividends on common shares during the preceding annual cycle; (iii) market capitalization of at least $100 million; (iv) median daily dollar trading volume of at least $100,000 for the preceding three months; and (v) trading of at least 250,000 shares per month for each of the preceding six months. The Index is then created by removing the 300 largest companies by market capitalization from the list of eligible companies, as of the annual Index screening date.
WisdomTree Trust Prospectus 65 |
Securities are weighted in the Index based on dividends paid over the prior annual cycle. Companies that pay a greater total dollar amount of dividends are more heavily weighted. To derive a company’s initial Index weight, (i) multiply the U.S. dollar value of the company’s annual gross dividend per share by the number of common shares outstanding for that company (the “Cash Dividend Factor”); (ii) calculate the Cash Dividend Factor for each company; (iii) add together all of the companies’ Cash Dividend Factors; and (iv) divide the company’s Cash Dividend Factor by the sum of all Cash Dividend Factors. On the Index’s annual screening date, the maximum weight of any security in the Index is capped at 2%, and the Index caps the weight of components exposed to any one sector (except for the real estate sector) at 25%. The weight of components exposed to the real estate sector is capped at 15%. The Index also may adjust the weight of individual components on the annual screening date based on certain quantitative thresholds or limits tied to key metrics of a component security, such as its trading volume. To the extent the Index reduces an individual component’s weight, the excess weight will be reallocated pro rata among the other components. Similarly, if the Index increases a component’s weight, the weight of the other components will be reduced on a pro rata basis to contribute the weight needed for such increase. The weight of a sector or individual component in the Index may fluctuate above or below specified caps and thresholds, respectively, between screening dates in response to market conditions.
WisdomTree, Inc. (“WisdomTree”), as Index provider, currently uses the Global Industry Classification Standard (GICS®), a widely recognized industry classification methodology developed by MSCI, Inc. and Standard & Poor’s Financial Services LLC, to define companies within a sector. The following sectors are included in the Index: communication services, consumer discretionary, consumer staples, energy, financials, health care, industrials, information technology, materials, real estate, and utilities. A sector is comprised of multiple industries. For example, the energy sector is comprised of companies in the energy equipment and services industry as well as the oil, gas and consumable fuels industry. As of June 30, 2023, companies in the industrials, consumer discretionary and materials sectors comprised a significant portion (i.e., in excess of 15% of the Index’s total weighting) of the Index; however, the Index's sector exposure may change from time to time.
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66 WisdomTree Trust Prospectus |
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WisdomTree Trust Prospectus 67 |
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68 WisdomTree Trust Prospectus |
Year | Return |
2013 | |
2014 | - |
2015 | |
2016 | |
2017 | |
2018 | - |
2019 | |
2020 | - |
2021 | |
2022 | - |
The Fund’s
as of was .
Best and Worst Quarter Returns (for the periods reflected in the bar chart above)
Return | Quarter/Year | |
1Q/2013 | ||
1Q/2020 |
WisdomTree Japan SmallCap Dividend Fund | 1 Year | 5 Years | 10 Years |
Return Before Taxes Based on NAV | ( |
( |
|
Return After Taxes on Distributions | ( |
( |
|
Return After Taxes on Distributions and Sale of Fund Shares | ( |
( |
|
WisdomTree Japan SmallCap Dividend Index (Reflects no deduction for fees, expenses or taxes) | ( |
( |
|
MSCI Japan Small Cap Index (Reflects no deduction for fees, expenses or taxes) | ( |
( |
Management
Investment Adviser and Sub-Adviser
WisdomTree Asset Management, Inc. (“WisdomTree Asset Management” or the “Adviser”) serves as investment adviser to the Fund. Mellon Investments Corporation (the “Sub-Adviser”) serves as sub-adviser to the Fund.
Portfolio Managers
The Fund is managed by the Sub-Adviser’s Equity Index Strategies Portfolio Management team. The individual members of the team jointly and primarily responsible for the day-to-day management of the Fund’s portfolio are identified below.
Marlene Walker-Smith, a Director, Head of Equity Index Portfolio Management, has been a portfolio manager of the Fund since October 2020.
David France, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Todd Frysinger, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
WisdomTree Trust Prospectus 69 |
Vlasta Sheremeta, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Michael Stoll, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Buying and Selling Fund Shares
The Fund is an ETF. This means that individual shares of the Fund are listed on a national securities exchange, such as NYSE Arca, and may only be purchased and sold in the secondary market through a broker-dealer at market prices. Because Fund shares trade at market prices rather than NAV, shares may trade at a price greater than NAV (premium) or less than NAV (discount). In addition, an investor may incur costs attributable to the difference between the highest price a buyer is willing to pay to purchase shares (bid) and the lowest price a seller is willing to accept for shares (ask) when buying and selling shares in the secondary market (the “bid/ask spread”). Recent information regarding the Fund, including its NAV, market price, premiums and discounts, and bid/ask spreads, is available on the Fund’s website at www.wisdomtree.com/investments.
The Fund issues and redeems shares at NAV only in large blocks of shares (“Creation Units”), which only certain institutions or large investors (typically market makers or other broker-dealers) may purchase or redeem. The Fund issues and redeems Creation Units in exchange for a portfolio of securities and/or U.S. cash.
Tax Information
The Fund intends to make distributions that may be taxed as ordinary income, qualified dividend income, or capital gains.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank) (an “Intermediary”), WisdomTree Asset Management or its affiliates may pay Intermediaries for certain activities related to the Fund, including participation in activities that are designed to make Intermediaries more knowledgeable about exchange-traded products, including the Fund, or for other activities, such as marketing, educational training or other initiatives related to the sale or promotion of Fund shares. These payments may create a conflict of interest by influencing the Intermediary and your salesperson to recommend the Fund over another investment. Any such arrangements do not result in increased Fund expenses. Ask your salesperson or visit the Intermediary’s website for more information.
70 WisdomTree Trust Prospectus |
The WisdomTree Japan Hedged Equity Fund (the “Fund”) seeks to track the price and yield performance, before fees and expenses, of the WisdomTree Japan Hedged Equity Index (the “Index”). The Fund seeks to provide Japanese equity returns while mitigating or “hedging” against fluctuations between the value of the Japanese yen and the U.S. dollar.
The following table describes the fees and expenses you may pay if you buy, hold and sell shares of the Fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example below. The fees are expressed as a percentage of the Fund’s average net assets.
Management Fees | |
Distribution and/or Service (12b-1) Fees | |
Other Expenses | |
Total Annual Fund Operating Expenses |
The following
example is intended to help retail investors compare the cost of investing in
the Fund with the cost of investing in other funds. It illustrates the
hypothetical expenses that such investors would incur over various periods if
they were to invest $10,000 in the Fund for the time periods indicated and then
redeem all of their shares at the end of those periods. This example assumes
that the Fund provides a return of 5% a year and that operating expenses remain
the same. This example does not include the brokerage commissions that retail
investors may pay to buy and sell shares of the Fund.
1 Year | 3 Years | 5 Years | 10 Years | |
$
|
$
|
$
|
$
|
The Fund pays
transaction costs, such as commissions, when it buys and sells securities (or
“turns over” its portfolio). A higher portfolio turnover rate may indicate
higher transaction costs and may result in higher taxes when Fund shares are
held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the example, affect the Fund’s performance. During the
most recent fiscal year, the Fund’s portfolio turnover rate was
The Fund employs a “passive management” – or indexing – investment approach designed to track the performance of the Index. The Fund generally uses a representative sampling strategy to achieve its investment objective, meaning it generally will invest in a sample of securities in the Index whose risk, return and other characteristics resemble the risk, return and other characteristics of the Index as a whole. Under normal circumstances, at least 95% of the Fund’s total assets (exclusive of collateral held from securities lending) will be invested in component securities of the Index and investments that have economic characteristics that are substantially identical to the economic characteristics of such component securities.
The Index is a dividend weighted index designed to provide exposure to Japanese equity markets while at the same time neutralizing exposure to fluctuations of the Japanese yen relative to the U.S. dollar. The Index consists of dividend-paying companies incorporated in Japan and traded on the Tokyo Stock Exchange that derive less than 80% of their revenue from sources in Japan. By excluding companies that derive 80% or more of their revenue from Japan, the Index is tilted towards companies with a more significant global revenue base. The companies included in the Index typically have greater exposure to the value of global currencies and, in many cases, their business prospects historically have improved when the value of the yen has declined and have weakened when the value of the yen has increased. To be eligible for inclusion in the Index, a company must meet the following criteria as of the annual Index screening date: (i) payment of at least $5 million in cash dividends on common shares during the preceding annual cycle; (ii) market capitalization of at least $100 million; (iii) median daily dollar trading volume of at least $100,000 for the preceding three months; and (iv) trading of at least 250,000 shares per month for each of the preceding six months.
WisdomTree Trust Prospectus 71 |
Securities are weighted in the Index based on dividends paid over the prior annual cycle. Companies that pay a greater total dollar amount of dividends are more heavily weighted. To derive a company’s initial Index weight, (i) multiply the U.S. dollar value of the company’s annual gross dividend per share by the number of common shares outstanding for that company (the “Cash Dividend Factor”); (ii) calculate the Cash Dividend Factor for each company; (iii) add together all of the companies’ Cash Dividend Factors; and (iv) divide the company’s Cash Dividend Factor by the sum of all Cash Dividend Factors. On the Index’s annual screening date, the maximum weight of any single security in the Index is capped at 5%, and the Index caps the weight of components exposed to a single sector (except for the real estate sector) at 25%. The weight of components exposed to the real estate sector is capped at 15%. The Index also may adjust the weight of individual components on the annual screening date based on certain quantitative thresholds or limits tied to key metrics of a component security, such as its trading volume. To the extent the Index reduces an individual component’s weight, the excess weight will be reallocated pro rata among the other components. Similarly, if the Index increases a component’s weight, the weight of the other components will be reduced on a pro rata basis to contribute the weight needed for such increase. The weight of a sector or individual component in the Index may fluctuate above or below specified caps and thresholds, respectively, between screening dates in response to market conditions.
WisdomTree, Inc. (“WisdomTree”), as Index provider, currently uses the Global Industry Classification Standard (GICS®), a widely recognized industry classification methodology developed by MSCI, Inc. and Standard & Poor’s Financial Services LLC, to define companies within a sector. The following sectors are included in the Index: communication services, consumer discretionary, consumer staples, energy, financials, health care, industrials, information technology, materials, real estate, and utilities. A sector is comprised of multiple industries. For example, the energy sector is comprised of companies in the energy equipment and services industry as well as the oil, gas and consumable fuels industry. As of June 30, 2023, companies in the industrials and consumer discretionary sectors comprised a significant portion (i.e., in excess of 15% of the Index’s total weighting) of the Index; however, the Index's sector exposure may change from time to time.
The Index “hedges” against fluctuations in the relative value of the Japanese yen against the U.S. dollar. The Index is designed to have higher returns than an equivalent un-hedged investment when the yen is weakening relative to the U.S. dollar. Conversely, the Index is designed to have lower returns than an equivalent unhedged investment when the yen is rising relative to the U.S. dollar. The Index applies an applicable published one-month currency forward rate to the total equity exposure to Japan to hedge against fluctuations in the relative value of the Japanese yen against the U.S. dollar.
Forward currency contracts or futures contracts are used to offset the Fund’s exposure to the Japanese yen. The amount of forward contracts and futures contracts in the Fund is based on the aggregate exposure of the Fund and Index to the Japanese yen. While this approach is designed to minimize the impact of currency fluctuations on Fund returns, it does not necessarily eliminate the Fund’s exposure to the yen. The return of the forward currency contracts and currency futures contracts may not perfectly offset the actual fluctuations between the yen and the U.S. dollar.
72 WisdomTree Trust Prospectus |
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WisdomTree Trust Prospectus 73 |
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74 WisdomTree Trust Prospectus |
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WisdomTree Trust Prospectus 75 |
Year | Return |
2013 | |
2014 | |
2015 | |
2016 | |
2017 | |
2018 | - |
2019 | |
2020 | |
2021 | |
2022 |
The Fund’s
as of was .
Best and Worst Quarter Returns (for the periods reflected in the bar chart above)
Return | Quarter/Year | |
1Q/2013 | ||
1Q/2020 |
WisdomTree Japan Hedged Equity Fund | 1 Year | 5 Years | 10 Years |
Return Before Taxes Based on NAV | |||
Return After Taxes on Distributions | |||
Return After Taxes on Distributions and Sale of Fund Shares | |||
WisdomTree Japan Hedged Equity Index (Reflects no deduction for fees, expenses or taxes) | |||
MSCI Japan Local Currency Index (Reflects no deduction for fees, expenses or taxes) | ( |
Management
Investment Adviser and Sub-Adviser
WisdomTree Asset Management, Inc. (“WisdomTree Asset Management” or the “Adviser”) serves as investment adviser to the Fund. Mellon Investments Corporation (the “Sub-Adviser”) serves as sub-adviser to the Fund.
Portfolio Managers
The Fund is managed by the Sub-Adviser’s Equity Index Strategies Portfolio Management team. The individual members of the team jointly and primarily responsible for the day-to-day management of the Fund’s portfolio are identified below.
Marlene Walker-Smith, a Director, Head of Equity Index Portfolio Management, has been a portfolio manager of the Fund since October 2020.
David France, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Todd Frysinger, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Vlasta Sheremeta, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
76 WisdomTree Trust Prospectus |
Michael Stoll, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Buying and Selling Fund Shares
The Fund is an ETF. This means that individual shares of the Fund are listed on a national securities exchange, such as NYSE Arca, and may only be purchased and sold in the secondary market through a broker-dealer at market prices. Because Fund shares trade at market prices rather than NAV, shares may trade at a price greater than NAV (premium) or less than NAV (discount). In addition, an investor may incur costs attributable to the difference between the highest price a buyer is willing to pay to purchase shares (bid) and the lowest price a seller is willing to accept for shares (ask) when buying and selling shares in the secondary market (the “bid/ask spread”). Recent information regarding the Fund, including its NAV, market price, premiums and discounts, and bid/ask spreads, is available on the Fund’s website at www.wisdomtree.com/investments.
The Fund issues and redeems shares at NAV only in large blocks of shares (“Creation Units”), which only certain institutions or large investors (typically market makers or other broker-dealers) may purchase or redeem. The Fund issues and redeems Creation Units in exchange for a portfolio of securities and/or U.S. cash.
Tax Information
The Fund intends to make distributions that may be taxed as ordinary income, qualified dividend income, or capital gains.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank) (an “Intermediary”), WisdomTree Asset Management or its affiliates may pay Intermediaries for certain activities related to the Fund, including participation in activities that are designed to make Intermediaries more knowledgeable about exchange-traded products, including the Fund, or for other activities, such as marketing, educational training or other initiatives related to the sale or promotion of Fund shares. These payments may create a conflict of interest by influencing the Intermediary and your salesperson to recommend the Fund over another investment. Any such arrangements do not result in increased Fund expenses. Ask your salesperson or visit the Intermediary’s website for more information.
WisdomTree Trust Prospectus 77 |
The WisdomTree Japan Hedged SmallCap Equity Fund (the “Fund”) seeks to track the price and yield performance, before fees and expenses, of the WisdomTree Japan Hedged SmallCap Equity Index (the “Index”).
The following table describes the fees and expenses you may pay if you buy, hold and sell shares of the Fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example below. The fees are expressed as a percentage of the Fund’s average net assets.
Management Fees | |
Distribution and/or Service (12b-1) Fees | |
Other Expenses | |
Total Annual Fund Operating Expenses |
The following
example is intended to help retail investors compare the cost of investing in
the Fund with the cost of investing in other funds. It illustrates the
hypothetical expenses that such investors would incur over various periods if
they were to invest $10,000 in the Fund for the time periods indicated and then
redeem all of their shares at the end of those periods. This example assumes
that the Fund provides a return of 5% a year and that operating expenses remain
the same. This example does not include the brokerage commissions that retail
investors may pay to buy and sell shares of the Fund.
1 Year | 3 Years | 5 Years | 10 Years | |
$
|
$
|
$
|
$
|
The Fund pays
transaction costs, such as commissions, when it buys and sells securities (or
“turns over” its portfolio). A higher portfolio turnover rate may indicate
higher transaction costs and may result in higher taxes when Fund shares are
held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the example, affect the Fund’s performance. During the
most recent fiscal year, the Fund’s portfolio turnover rate was
The Fund employs a “passive management” – or indexing – investment approach designed to track the performance of the Index. The Fund generally uses a representative sampling strategy to achieve its investment objective, meaning it generally will invest in a sample of the securities in the Index whose risk, return and other characteristics resemble the risk, return and other characteristics of the Index as a whole. Under normal circumstances, at least 80% of the Fund’s total assets (exclusive of collateral held from securities lending) will be invested in component securities of the Index and investments that have economic characteristics that are substantially identical to the economic characteristics of such component securities.
The Index is a dividend weighted index designed to provide exposure to Japanese equity markets while at the same time neutralizing exposure to fluctuations of the value of the Japanese yen relative to the U.S. dollar. The Index consists of dividend-paying small capitalization companies incorporated in Japan and traded on the Tokyo Stock Exchange. As of June 30, 2023, the Index had a market capitalization range from $83.6 million to $3.6 billion, with an average market capitalization of $847.3 million. To be eligible for inclusion in the Index, a company must meet the following criteria as of the annual Index screening date: (i) incorporated in Japan and traded on the Tokyo Stock Exchange; (ii) payment of at least $5 million in cash dividends on common shares during the preceding annual cycle; (iii) market capitalization of at least $100 million; (iv) median daily dollar trading volume of at least $100,000 for the preceding three months; and (v) trading of at least 250,000 shares per month for each of the preceding six months. The 300 largest companies by market capitalization are then removed from the list of eligible companies, as of the annual Index screening date.
78 WisdomTree Trust Prospectus |
Securities are weighted in the Index based on dividends paid over the prior annual cycle. Companies that pay a greater total dollar amount of dividends are more heavily weighted. To derive a company’s initial Index weight, (i) multiply the U.S. dollar value of the company’s annual gross dividend per share by the number of common shares outstanding for that company (the “Cash Dividend Factor”); (ii) calculate the Cash Dividend Factor for each company; (iii) add together all of the companies’ Cash Dividend Factors; and (iv) divide the company’s Cash Dividend Factor by the sum of all Cash Dividend Factors. On the Index’s annual screening date, the maximum weight of any single security in the Index is capped at 2%, and the Index caps the weight of components exposed to a single sector (except for the real estate sector) at 25%. The weight of components exposed to the real estate sector is capped at 15%. The Index also may adjust the weight of individual components on the annual screening date based on certain quantitative thresholds or limits tied to key metrics of a component security, such as its trading volume. To the extent the Index reduces an individual component’s weight, the excess weight will be reallocated pro rata among the other components. Similarly, if the Index increases a component’s weight, the weight of the other components will be reduced on a pro rata basis to contribute the weight needed for such increase. The weight of a sector or individual component in the Index may fluctuate above or below specified caps and thresholds, respectively, between screening dates in response to market conditions.
WisdomTree, Inc. (“WisdomTree”), as Index provider, currently uses the Global Industry Classification Standard (GICS®), a widely recognized industry classification methodology developed by MSCI, Inc. and Standard & Poor’s Financial Services LLC, to define companies within a sector. The following sectors are included in the Index: communication services, consumer discretionary, consumer staples, energy, financials, health care, industrials, information technology, materials, real estate, and utilities. A sector is comprised of multiple industries. For example, the energy sector is comprised of companies in the energy equipment and services industry as well as the oil, gas and consumable fuels industry. As of June 30, 2023, companies in the industrials, consumer discretionary and materials sectors comprised a significant portion (i.e., in excess of 15% of the Index’s total weighting) of the Index; however, the Index's sector exposure may change from time to time.
The Index “hedges” against fluctuations in the relative value of the Japanese yen against the U.S. dollar. The Index is designed to have higher returns than an equivalent unhedged investment when the yen is weakening relative to the U.S. dollar. Conversely, the Index is designed to have lower returns than an equivalent unhedged investment when the yen is rising relative to the U.S. dollar. The Index applies an applicable published one-month currency forward rate to the total equity exposure to Japan to hedge against fluctuations in the relative value of the Japanese yen against the U.S. dollar.
Forward currency contracts or futures contracts are used to offset the Fund’s exposure to the Japanese yen. The amount of forward contracts and futures contracts in the Fund is based on the aggregate exposure of the Fund and Index to the Japanese yen. While this approach is designed to minimize the impact of currency fluctuations on Fund returns, it does not necessarily eliminate the Fund’s exposure to the yen. The return of the forward currency contracts and currency futures contracts may not perfectly offset the actual fluctuations between the yen and the U.S. dollar.
WisdomTree Trust Prospectus 79 |
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80 WisdomTree Trust Prospectus |
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WisdomTree Trust Prospectus 81 |
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Year | Return |
2014 | |
2015 | |
2016 | |
2017 | |
2018 | - |
2019 | |
2020 | - |
2021 | |
2022 |
The Fund’s
as of was .
82 WisdomTree Trust Prospectus |
Best and Worst Quarter Returns (for the periods reflected in the bar chart above)
Return | Quarter/Year | |
4Q/2016 | ||
1Q/2020 |
WisdomTree Japan Hedged SmallCap Equity Fund | 1 Year | 5 Years | Since
Inception |
Return Before Taxes Based on NAV | |||
Return After Taxes on Distributions | |||
Return After Taxes on Distributions and Sale of Fund Shares | |||
WisdomTree Japan Hedged SmallCap Equity Index (Reflects no deduction for fees, expenses or taxes) | |||
MSCI Japan Small Cap Local Currency Index (Reflects no deduction for fees, expenses or taxes) |
Management
Investment Adviser and Sub-Adviser
WisdomTree Asset Management, Inc. (“WisdomTree Asset Management” or the “Adviser”) serves as investment adviser to the Fund. Mellon Investments Corporation (the “Sub-Adviser”) serves as sub-adviser to the Fund.
Portfolio Managers
The Fund is managed by the Sub-Adviser’s Equity Index Strategies Portfolio Management team. The individual members of the team jointly and primarily responsible for the day-to-day management of the Fund’s portfolio are identified below.
Marlene Walker-Smith, a Director, Head of Equity Index Portfolio Management, has been a portfolio manager of the Fund since October 2020.
David France, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Todd Frysinger, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Vlasta Sheremeta, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Michael Stoll, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Buying and Selling Fund Shares
The Fund is an ETF. This means that individual shares of the Fund are listed on a national securities exchange, such as NASDAQ, and may only be purchased and sold in the secondary market through a broker-dealer at market prices. Because Fund shares trade at market prices rather than NAV, shares may trade at a price greater than NAV (premium) or less than NAV (discount). In addition, an investor may incur costs attributable to the difference between the highest price a buyer is willing to pay to purchase shares (bid) and the lowest price a seller is willing to accept for shares (ask) when buying and selling shares in the secondary market (the “bid/ask spread”). Recent information regarding the Fund, including its NAV, market price, premiums and discounts, and bid/ask spreads, is available on the Fund’s website at www.wisdomtree.com/investments.
WisdomTree Trust Prospectus 83 |
The Fund issues and redeems shares at NAV only in large blocks of shares (“Creation Units”), which only certain institutions or large investors (typically market makers or other broker-dealers) may purchase or redeem. The Fund issues and redeems Creation Units in exchange for a portfolio of securities and/or U.S. cash.
Tax Information
The Fund intends to make distributions that may be taxed as ordinary income, qualified dividend income, or capital gains.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank) (an “Intermediary”), WisdomTree Asset Management or its affiliates may pay Intermediaries for certain activities related to the Fund, including participation in activities that are designed to make Intermediaries more knowledgeable about exchange-traded products, including the Fund, or for other activities, such as marketing, educational training or other initiatives related to the sale or promotion of Fund shares. These payments may create a conflict of interest by influencing the Intermediary and your salesperson to recommend the Fund over another investment. Any such arrangements do not result in increased Fund expenses. Ask your salesperson or visit the Intermediary’s website for more information.
84 WisdomTree Trust Prospectus |
The WisdomTree Europe Hedged Equity Fund (the “Fund”) seeks to track the price and yield performance, before fees and expenses, of the WisdomTree Europe Hedged Equity Index (the “Index”).
The following table describes the fees and expenses you may pay if you buy, hold and sell shares of the Fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example below. The fees are expressed as a percentage of the Fund’s average net assets.
Management Fees | |
Distribution and/or Service (12b-1) Fees | |
Other Expenses | |
Total Annual Fund Operating Expenses |
1 |
The following
example is intended to help retail investors compare the cost of investing in
the Fund with the cost of investing in other funds. It illustrates the
hypothetical expenses that such investors would incur over various periods if
they were to invest $10,000 in the Fund for the time periods indicated and then
redeem all of their shares at the end of those periods. This example assumes
that the Fund provides a return of 5% a year and that operating expenses remain
the same. This example does not include the brokerage commissions that retail
investors may pay to buy and sell shares of the Fund.
1 Year | 3 Years | 5 Years | 10 Years | |
$
|
$
|
$
|
$
|
The Fund pays
transaction costs, such as commissions, when it buys and sells securities (or
“turns over” its portfolio). A higher portfolio turnover rate may indicate
higher transaction costs and may result in higher taxes when Fund shares are
held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the example, affect the Fund’s performance. During the
most recent fiscal year, the Fund’s portfolio turnover rate was
The Fund employs a “passive management” – or indexing – investment approach designed to track the performance of the Index. The Fund generally uses a representative sampling strategy to achieve its investment objective, meaning it generally will invest in a sample of the securities in the Index whose risk, return and other characteristics resemble the risk, return and other characteristics of the Index as a whole. Under normal circumstances, at least 95% of the Fund’s total assets (exclusive of collateral held from securities lending) will be invested in component securities of the Index and investments that have economic characteristics that are substantially identical to the economic characteristics of such component securities.
The Index is a dividend weighted index designed to provide exposure to European equity securities, particularly shares of European exporters, while at the same time neutralizing exposure to fluctuations between the value of the U.S. dollar and the euro. Shares of European exporters stand to benefit from weakness in the value of the euro as this decreases the relative cost of the goods and services they are exporting. The Index consists of those dividend-paying companies within the WisdomTree International Equity Index, which defines the dividend-paying universe of companies in the industrialized world, excluding Canada and the United States, that are organized and domiciled under the laws of a European country, trade in euros, have at least $1 billion in market capitalization, and derive at least 50% of their revenue from countries outside of Europe. Countries historically represented in the Index include: Germany, France, the Netherlands, Spain, Belgium, Finland, Italy, Portugal, Austria and Ireland. To be eligible for inclusion in the Index, a company must meet the following criteria as of the annual Index screening date: (i) payment of at least $5 million in cash dividends on shares of common stock during the preceding annual cycle; (ii) median daily dollar trading volume of at least $100,000 for the preceding three months; and (iii) trading of at least 250,000 shares per month for each of the preceding six months.
WisdomTree Trust Prospectus 85 |
Securities are weighted in the Index based on dividends paid over the prior annual cycle. Companies that pay a greater total dollar amount of dividends are more heavily weighted. To derive a company’s initial Index weight, (i) multiply the U.S. dollar value of the company’s annual gross dividend per share by the number of common shares outstanding for that company (the “Cash Dividend Factor”); (ii) calculate the Cash Dividend Factor for each company; (iii) add together all of the companies’ Cash Dividend Factors; and (iv) divide the company’s Cash Dividend Factor by the sum of all Cash Dividend Factors. On the Index’s annual screening date, the maximum weight of any single security in the Index is capped at 5%, and the Index caps the weight of components exposed to a single sector (except for the real estate sector) at 25%. The weight of components exposed to the real estate sector is capped at 15%. The Index also may adjust the weight of individual components on the annual screening date based on certain quantitative thresholds or limits tied to key metrics of a component security, such as its trading volume. To the extent the Index reduces an individual component’s weight, the excess weight will be reallocated pro rata among the other components. Similarly, if the Index increases a component’s weight, the weight of the other components will be reduced on a pro rata basis to contribute the weight needed for such increase. The weight of a sector or individual component in the Index may fluctuate above or below specified caps and thresholds, respectively, between screening dates in response to market conditions.
WisdomTree, Inc. (“WisdomTree”), as Index provider, currently uses the Global Industry Classification Standard (GICS®), a widely recognized industry classification methodology developed by MSCI, Inc. and Standard & Poor’s Financial Services LLC, to define companies within a sector. The following sectors are included in the Index: communication services, consumer discretionary, consumer staples, energy, financials, health care, industrials, information technology, materials, real estate, and utilities. A sector is comprised of multiple industries. For example, the energy sector is comprised of companies in the energy equipment and services industry as well as the oil, gas and consumable fuels industry. As of June 30, 2023, companies in the consumer discretionary and consumer staples sectors comprised a significant portion (i.e., in excess of 15% of the Index’s total weighting) of the Index; however, the Index's sector exposure may change from time to time.
As of June 30, 2023, the equity securities of companies domiciled in or otherwise tied to France, Germany and the Netherlands comprised a significant portion (i.e., in excess of 15% of the Index’s total weighting) of the Index, although the Index’s geographic exposure may change from time to time.
The Index “hedges” against fluctuations in the relative value of the euro against the U.S. dollar. The Index is designed to have higher returns than an equivalent un-hedged investment when the U.S. dollar is going up in value relative to the euro. Conversely, the Index is designed to have lower returns than an equivalent un-hedged investment when the U.S. dollar is falling in value relative to the euro. The Index applies an applicable published one-month currency forward rate to the total equity exposure of each country in the Index to hedge against fluctuations in the relative value of the euro against the U.S. dollar. If a country that had previously adopted the euro as its official currency were to revert back to its local currency, the country would remain in the Index and the Index would be hedged in such local currency as soon as practicable after forward rates become available for such currency.
Forward currency contracts or futures contracts are used to offset the Fund’s exposure to the euro. The amount of forward contracts and futures contracts in the Fund is based on the aggregate exposure of the Fund and Index to the euro. While this approach is designed to minimize the impact of currency fluctuations on Fund returns, it does not necessarily eliminate exposure to all currency fluctuations. The return of the forward currency contracts and currency futures contracts may not perfectly offset the actual fluctuations of the euro relative to the U.S. dollar.
86 WisdomTree Trust Prospectus |
■ |
Investments
in France
France’s economy is dependent on its agricultural exports and
fluctuations in the demand for agricultural products may have negative impacts
on France’s economy. The United Kingdom’s (“U.K.”) exit from the European Union
may adversely impact France’s economy due to decreased demand for French exports
in the U.K. France has experienced several terrorist attacks over the past
several years, creating a climate of insecurity that has been detrimental to
tourism.
Investments
in Germany
Germany’s economy is closely connected to the economies of
other members of the EU and EMU and adverse economic conditions effecting one
member may have effects across Europe. Additionally, EU or EMU policies and
restrictions may have significant impacts on Germany’s economy. These and other
factors, including the potential consequences of sanctions related to the
Russian invasion of Ukraine and the withdrawal of the United Kingdom from the
EU, could have a negative impact on the Fund’s
performance.
Investments
in the Netherlands
The Netherlands lacks many natural resources and,
thus, is reliant on trade partners and vulnerable to fluctuations or shortages
in commodity markets. Further, the Dutch economy is heavily dependent on the
export of financial services. A decrease in demand for such services or a
general downturn in the financial sector could have an adverse impact on the
Dutch economy.
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WisdomTree Trust Prospectus 87 |
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88 WisdomTree Trust Prospectus |
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WisdomTree Trust Prospectus 89 |
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Year | Return |
2013 | |
2014 | |
2015 | |
2016 | |
2017 | |
2018 | - |
2019 | |
2020 | - |
2021 | |
2022 | - |
The Fund’s
as of was .
Best and Worst Quarter Returns (for the periods reflected in the bar chart above)
Return | Quarter/Year | |
1Q/2015 | ||
1Q/2020 |
WisdomTree Europe Hedged Equity Fund | 1 Year | 5 Years | 10 Years |
Return Before Taxes Based on NAV | ( |
||
Return After Taxes on Distributions | ( |
||
Return After Taxes on Distributions and Sale of Fund Shares | ( |
||
WisdomTree Europe Hedged Equity Index (Reflects no deduction for fees, expenses or taxes) | ( |
||
MSCI EMU Local Currency Index (Reflects no deduction for fees, expenses or taxes) | ( |
90 WisdomTree Trust Prospectus |
Management
Investment Adviser and Sub-Adviser
WisdomTree Asset Management, Inc. (“WisdomTree Asset Management” or the “Adviser”) serves as investment adviser to the Fund. Mellon Investments Corporation (the “Sub-Adviser”) serves as sub-adviser to the Fund.
Portfolio Managers
The Fund is managed by the Sub-Adviser’s Equity Index Strategies Portfolio Management team. The individual members of the team jointly and primarily responsible for the day-to-day management of the Fund’s portfolio are identified below.
Marlene Walker-Smith, a Director, Head of Equity Index Portfolio Management, has been a portfolio manager of the Fund since October 2020.
David France, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Todd Frysinger, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Vlasta Sheremeta, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Michael Stoll, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Buying and Selling Fund Shares
The Fund is an ETF. This means that individual shares of the Fund are listed on a national securities exchange, such as NYSE Arca, and may only be purchased and sold in the secondary market through a broker-dealer at market prices. Because Fund shares trade at market prices rather than NAV, shares may trade at a price greater than NAV (premium) or less than NAV (discount). In addition, an investor may incur costs attributable to the difference between the highest price a buyer is willing to pay to purchase shares (bid) and the lowest price a seller is willing to accept for shares (ask) when buying and selling shares in the secondary market (the “bid/ask spread”). Recent information regarding the Fund, including its NAV, market price, premiums and discounts, and bid/ask spreads, is available on the Fund’s website at www.wisdomtree.com/investments.
The Fund issues and redeems shares at NAV only in large blocks of shares (“Creation Units”), which only certain institutions or large investors (typically market makers or other broker-dealers) may purchase or redeem. The Fund issues and redeems Creation Units in exchange for a portfolio of securities and/or U.S. cash.
Tax Information
The Fund intends to make distributions that may be taxed as ordinary income, qualified dividend income, or capital gains.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank) (an “Intermediary”), WisdomTree Asset Management or its affiliates may pay Intermediaries for certain activities related to the Fund, including participation in activities that are designed to make Intermediaries more knowledgeable about exchange-traded products, including the Fund, or for other activities, such as marketing, educational training or other initiatives related to the sale or promotion of Fund shares. These payments may create a conflict of interest by influencing the Intermediary and your salesperson to recommend the Fund over another investment. Any such arrangements do not result in increased Fund expenses. Ask your salesperson or visit the Intermediary’s website for more information.
WisdomTree Trust Prospectus 91 |
The WisdomTree Europe Hedged SmallCap Equity Fund (the “Fund”) seeks to track the price and yield performance, before fees and expenses, of the WisdomTree Europe Hedged SmallCap Equity Index (the “Index”).
The following table describes the fees and expenses you may pay if you buy, hold and sell shares of the Fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example below. The fees are expressed as a percentage of the Fund’s average net assets.
Management Fees | |
Distribution and/or Service (12b-1) Fees | |
Other Expenses | |
Total Annual Fund Operating Expenses |
1 |
The following
example is intended to help retail investors compare the cost of investing in
the Fund with the cost of investing in other funds. It illustrates the
hypothetical expenses that such investors would incur over various periods if
they were to invest $10,000 in the Fund for the time periods indicated and then
redeem all of their shares at the end of those periods. This example assumes
that the Fund provides a return of 5% a year and that operating expenses remain
the same. This example does not include the brokerage commissions that retail
investors may pay to buy and sell shares of the Fund.
1 Year | 3 Years | 5 Years | 10 Years | |
$
|
$
|
$
|
$
|
The Fund pays
transaction costs, such as commissions, when it buys and sells securities (or
“turns over” its portfolio). A higher portfolio turnover rate may indicate
higher transaction costs and may result in higher taxes when Fund shares are
held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the example, affect the Fund’s performance. During the
most recent fiscal year, the Fund’s portfolio turnover rate was
The Fund employs a “passive management” – or indexing – investment approach designed to track the performance of the Index. The Fund generally uses a representative sampling strategy to achieve its investment objective, meaning it generally will invest in a sample of the securities in the Index whose risk, return and other characteristics resemble the risk, return, and other characteristics of the Index as a whole. Under normal circumstances, at least 80% of the Fund’s total assets (exclusive of collateral held from securities lending) will be invested in component securities of the Index and investments that have economic characteristics that are substantially identical to the economic characteristics of such component securities.
The Index is a dividend weighted index designed to provide exposure to small cap equity securities within Europe, while at the same time neutralizing exposure to fluctuations between the value of the euro and the U.S. dollar. The Index consists of the dividend-paying companies within the bottom 10% of the total market capitalization of the WisdomTree International Equity Index, which defines the dividend-paying universe of companies in the industrialized world, excluding Canada and the United States, that trade in euros and are domiciled (i.e., maintain their principal place of business) in and list their shares on a stock exchange in a European country, such as Austria, Belgium, Finland, France, Germany, Ireland, Italy, Netherlands, Portugal or Spain. As of June 30, 2023, the Index had a market capitalization range from $212.4 million to $11.8 billion, with an average market capitalization of $2.7 billion. To be eligible for inclusion in the Index, a company must meet the following criteria as of the annual Index screening date: (i) payment of at least $5 million in cash dividends on common shares during the preceding annual cycle; (ii) market capitalization of at least $100 million; (iii) median daily dollar trading volume of at least $100,000 for the preceding three months; and (iv) trading of at least 250,000 shares per month for each of the preceding six months.
92 WisdomTree Trust Prospectus |
Securities are weighted in the Index based on dividends paid over the prior annual cycle. Companies that pay a greater total dollar amount of dividends are more heavily weighted. To derive a company’s initial Index weight, (i) multiply the U.S. dollar value of the company’s annual gross dividend per share by the number of common shares outstanding for that company (the “Cash Dividend Factor”); (ii) calculate the Cash Dividend Factor for each company; (iii) add together all of the companies’ Cash Dividend Factors; and (iv) divide the company’s Cash Dividend Factor by the sum of all Cash Dividend Factors. On the Index’s annual screening date, the maximum weight of any single security is capped at 2%, and the Index caps the weight of components exposed to a single sector (except for the real estate sector) at 25%. The weight of components exposed to the real estate sector is capped at 15%. The Index also may adjust the weight of individual components on the annual screening date based on certain quantitative thresholds or limits tied to key metrics of a component security, such as its trading volume. To the extent the Index reduces an individual component’s weight, the excess weight will be reallocated pro rata among the other components. Similarly, if the Index increases a component’s weight, the weight of the other components will be reduced on a pro rata basis to contribute the weight needed for such increase. The weight of a sector or individual component in the Index may fluctuate above or below specified caps and thresholds, respectively, between screening dates in response to market conditions.
WisdomTree, Inc. (“WisdomTree”), as Index provider, currently uses the Global Industry Classification Standard (GICS®), a widely recognized industry classification methodology developed by MSCI, Inc. and Standard & Poor’s Financial Services LLC, to define companies within a sector. The following sectors are included in the Index: communication services, consumer discretionary, consumer staples, energy, financials, health care, industrials, information technology, materials, real estate, and utilities. A sector is comprised of multiple industries. For example, the energy sector is comprised of companies in the energy equipment and services industry as well as the oil, gas and consumable fuels industry. As of June 30, 2023, companies in the industrials and financials sectors comprised a significant portion (i.e., in excess of 15% of the Index’s total weighting) of the Index; however, the Index's sector exposure may change from time to time.
As of June 30, 2023, the equity securities of companies domiciled in or otherwise tied to Italy, France and Spain comprised a significant portion (i.e., in excess of 15% of the Index’s total weighting) of the Index, although the Index’s geographic exposure may change from time to time.
The Index “hedges” against fluctuations in the relative value of the euro against the U.S. dollar. The Index is designed to have higher returns than an equivalent un-hedged investment when the U.S. dollar is going up in value relative to the euro. Conversely, the Index is designed to have lower returns than an equivalent un-hedged investment when the U.S. dollar is falling in value relative to the euro. The Index applies an applicable published one-month currency forward rate to the total equity exposure of each country in the Index to hedge against fluctuations in the relative value of the euro against the U.S. dollar. If a country that had previously adopted the euro as its official currency were to revert back to its local currency, the country would remain in the Index and the Index would be hedged in such local currency as soon as practicable after forward rates become available for such currency.
Forward currency contracts or futures contracts are used to offset the Fund’s exposure to the euro. The amount of forward contracts and futures contracts in the Fund is based on the aggregate exposure of the Fund and Index to the euro. While this approach is designed to minimize the impact of currency fluctuations on Fund returns, it does not necessarily eliminate exposure to all currency fluctuations. The return of the forward currency contracts and currency futures contracts may not perfectly offset the actual fluctuations of the euro relative to the U.S. dollar.
WisdomTree Trust Prospectus 93 |
■ |
Investments
in Italy
Italy’s economy has experienced slower growth compared to other
European economies. Recently, the Italian economy has experienced volatility due
to concerns about economic downturn and rising government debt levels. The
Italian government has experienced significant budget deficits and a high amount
of public debt relative to economic output, which has impaired Italy’s sovereign
debt rating.
Investments
in France
France’s economy is dependent on its agricultural exports and
fluctuations in the demand for agricultural products may have negative impacts
on France’s economy. The United Kingdom’s (“U.K.”) exit from the European Union
may adversely impact France’s economy due to decreased demand for French exports
in the U.K. France has experienced several terrorist attacks over the past
several years, creating a climate of insecurity that has been detrimental to
tourism.
Investments
in Spain
Spain’s economy has from time to time experienced significant
financial market volatility and economic adversity due to concerns about
economic downturn, political instability and government debt levels. Spain’s
economy is also subject to the destabilizing effects of recent successionist
movements as well as increased political tensions and social unrest stemming
from such movements.
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94 WisdomTree Trust Prospectus |
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WisdomTree Trust Prospectus 95 |
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96 WisdomTree Trust Prospectus |
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Year | Return |
2016 | |
2017 | |
2018 | - |
2019 | |
2020 | - |
2021 | |
2022 | - |
The Fund’s
as of was .
Best and Worst Quarter Returns (for the periods reflected in the bar chart above)
Return | Quarter/Year | |
2Q/2020 | ||
1Q/2020 |
WisdomTree Europe Hedged SmallCap Equity Fund | 1 Year | 5 Years | Since
Inception |
Return Before Taxes Based on NAV | ( |
||
Return After Taxes on Distributions | ( |
||
Return After Taxes on Distributions and Sale of Fund Shares | ( |
||
WisdomTree Europe Hedged SmallCap Equity Index (Reflects no deduction for fees, expenses or taxes) | ( |
WisdomTree Trust Prospectus 97 |
WisdomTree Europe Hedged SmallCap Equity Fund | 1 Year | 5 Years | Since
Inception March 4, 2015 |
MSCI EMU Small Cap Local Currency Index (Reflects no deduction for fees, expenses or taxes) | ( |
Management
Investment Adviser and Sub-Adviser
WisdomTree Asset Management, Inc. (“WisdomTree Asset Management” or the “Adviser”) serves as investment adviser to the Fund. Mellon Investments Corporation (the “Sub-Adviser”) serves as sub-adviser to the Fund.
Portfolio Managers
The Fund is managed by the Sub-Adviser’s Equity Index Strategies Portfolio Management team. The individual members of the team jointly and primarily responsible for the day-to-day management of the Fund’s portfolio are identified below.
Marlene Walker-Smith, a Director, Head of Equity Index Portfolio Management, has been a portfolio manager of the Fund since October 2020.
David France, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Todd Frysinger, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Vlasta Sheremeta, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Michael Stoll, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Buying and Selling Fund Shares
The Fund is an ETF. This means that individual shares of the Fund are listed on a national securities exchange, such as NYSE Arca, and may only be purchased and sold in the secondary market through a broker-dealer at market prices. Because Fund shares trade at market prices rather than NAV, shares may trade at a price greater than NAV (premium) or less than NAV (discount). In addition, an investor may incur costs attributable to the difference between the highest price a buyer is willing to pay to purchase shares (bid) and the lowest price a seller is willing to accept for shares (ask) when buying and selling shares in the secondary market (the “bid/ask spread”). Recent information regarding the Fund, including its NAV, market price, premiums and discounts, and bid/ask spreads, is available on the Fund’s website at www.wisdomtree.com/investments.
The Fund issues and redeems shares at NAV only in large blocks of shares (“Creation Units”), which only certain institutions or large investors (typically market makers or other broker-dealers) may purchase or redeem. The Fund issues and redeems Creation Units in exchange for a portfolio of securities and/or U.S. cash.
Tax Information
The Fund intends to make distributions that may be taxed as ordinary income, qualified dividend income, or capital gains.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank) (an “Intermediary”), WisdomTree Asset Management or its affiliates may pay Intermediaries for certain activities related to the Fund, including participation in activities that are designed to make Intermediaries more knowledgeable about exchange-traded products, including the Fund, or for other activities, such as marketing, educational training or other initiatives related to the sale or promotion of Fund shares. These payments may create a conflict of interest by influencing the Intermediary and your salesperson to recommend the Fund over another investment. Any such arrangements do not result in increased Fund expenses. Ask your salesperson or visit the Intermediary’s website for more information.
98 WisdomTree Trust Prospectus |
The WisdomTree International Hedged Quality Dividend Growth Fund (the “Fund”) seeks to track the price and yield performance, before fees and expenses, of the WisdomTree International Hedged Quality Dividend Growth Index (the “Index”).
The following table describes the fees and expenses you may pay if you buy, hold and sell shares of the Fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example below. The fees are expressed as a percentage of the Fund’s average net assets.
Management Fees | |
Distribution and/or Service (12b-1) Fees | |
Other Expenses | |
Total Annual Fund Operating Expenses |
1 |
The following
example is intended to help retail investors compare the cost of investing in
the Fund with the cost of investing in other funds. It illustrates the
hypothetical expenses that such investors would incur over various periods if
they were to invest $10,000 in the Fund for the time periods indicated and then
redeem all of their shares at the end of those periods. This example assumes
that the Fund provides a return of 5% a year and that operating expenses remain
the same. This example does not include the brokerage commissions that retail
investors may pay to buy and sell shares of the Fund.
1 Year | 3 Years | 5 Years | 10 Years | |
$
|
$
|
$
|
$
|
The Fund pays
transaction costs, such as commissions, when it buys and sells securities (or
“turns over” its portfolio). A higher portfolio turnover rate may indicate
higher transaction costs and may result in higher taxes when Fund shares are
held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the example, affect the Fund’s performance. During the
most recent fiscal year, the Fund’s portfolio turnover rate was
The Fund employs a “passive management” – or indexing – investment approach designed to track the performance of the Index. The Fund generally uses a representative sampling strategy to achieve its investment objective, meaning it generally will invest in a sample of the securities in the Index whose risk, return and other characteristics resemble the risk, return and other characteristics of the Index as a whole. Under normal circumstances, at least 80% of the Fund’s total assets (exclusive of collateral held from securities lending) will be invested in component securities of the Index and investments that have economic characteristics that are substantially identical to the economic characteristics of such component securities.
The Index consists of dividend-paying common stocks with growth characteristics of companies in the industrialized world, excluding Canada and the United States, while at the same time neutralizing exposure to fluctuations of the value of foreign currencies relative to the U.S. dollar. The Index is generally comprised of the 300 companies in the WisdomTree International Equity Index with the best combined rank of certain growth and quality factors, specifically: medium-term earnings growth expectations, return on equity, and return on assets. The WisdomTree International Equity Index is a fundamentally weighted index that is comprised of companies that pay regular cash dividends. To be eligible for inclusion in the WisdomTree International Equity Index a company must be incorporated in one of 15 developed European countries (Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, or the United Kingdom), Israel, Japan, Australia, Hong Kong or Singapore.
WisdomTree Trust Prospectus 99 |
To be eligible for inclusion in the Index, a company must meet the following criteria as of the annual Index screening date: (i) payment of at least $5 million in cash dividends on common shares during the preceding annual cycle; (ii) market capitalization of at least $1 billion; (iii) median daily dollar trading volume of at least $100,000 for each of the preceding three months; (iv) trading of at least 250,000 shares per month for each of the preceding six months; and (v) an earnings yield greater than the dividend yield.
Securities are weighted in the Index based on dividends paid over the prior annual cycle. Companies that pay a greater total dollar amount of dividends are more heavily weighted. To derive a company’s initial Index weight, (i) multiply the U.S. dollar value of the company’s annual gross dividend per share by the number of common shares outstanding for that company (the “Cash Dividend Factor”); (ii) calculate the Cash Dividend Factor for each company; (iii) add together all of the companies’ Cash Dividend Factors; and (iv) divide the company’s Cash Dividend Factor by the sum of all Cash Dividend Factors. On the Index’s annual screening date, the maximum weight of any security in the Index is capped at 5%, and the Index caps the weight of components exposed to any one country and any one sector (except for the real estate sector) at 20%. The weight of components exposed to the real estate sector is capped at 15%. The Index also may adjust the weight of individual components on the annual screening date based on certain quantitative thresholds or limits tied to key metrics of a component security, such as its trading volume. To the extent the Index reduces an individual component’s weight, the excess weight will be reallocated pro rata among the other components. Similarly, if the Index increases a component’s weight, the weight of the other components will be reduced on a pro rata basis to contribute the weight needed for such increase. The weight of a sector, country, or individual component in the Index may fluctuate above or below specified caps and thresholds, respectively, between screening dates in response to market conditions.
WisdomTree, Inc. (“WisdomTree”), as Index provider, currently uses the Global Industry Classification Standard (GICS®), a widely recognized industry classification methodology developed by MSCI, Inc. and Standard & Poor’s Financial Services LLC, to define companies within a sector. The following sectors are included in the Index: communication services, consumer discretionary, consumer staples, energy, financials, health care, industrials, information technology, materials, real estate, and utilities. A sector is comprised of multiple industries. For example, the energy sector is comprised of companies in the energy equipment and services industry as well as the oil, gas and consumable fuels industry. As of June 30, 2023, companies in the consumer discretionary, health care, and consumer staples sectors comprised a significant portion (i.e., in excess of 15% of the Index’s total weighting) of the Index; however, the Index's sector exposure may change from time to time.
As of June 30, 2023, the equity securities of companies domiciled in or otherwise tied to Europe, particularly Switzerland and the United Kingdom, comprised a significant portion (i.e., in excess of 15% of the Index’s total weighting) of the Index, although the Index’s geographic exposure may change from time to time.
The Index “hedges” against fluctuations in the relative value of foreign currencies against the U.S. dollar. The Index is designed to have higher returns than an equivalent unhedged investment when foreign currencies are weakening relative to the U.S. dollar. Conversely, the Index is designed to have lower returns than an equivalent unhedged investment when foreign currencies are rising relative to the U.S. dollar. The Index applies an applicable published one-month currency forward rate to the total equity exposure of each country in the Index to hedge against fluctuations in the relative value of their respective currencies against the U.S. dollar.
Forward currency contracts or futures contracts are used to offset the Fund’s exposure to foreign currencies. The amount of forward contracts and futures contracts in the Fund is based on the aggregate exposure of the Fund and Index to the specified foreign currencies. While this approach is designed to minimize the impact of currency fluctuations on Fund returns, it does not necessarily eliminate the Fund’s exposure to foreign currencies. The return of the forward currency contracts and currency futures contracts may not perfectly offset the actual fluctuations between foreign currencies and the U.S. dollar.
100 WisdomTree Trust Prospectus |
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WisdomTree Trust Prospectus 101 |
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Investments
in Europe
Many European countries are members of the European Union
(“EU”) as well as the European Economic and Monetary Union (“EMU”) and, as a
result, the economies and markets of European countries can be closely connected
and largely interdependent. As such, adverse events in one European country may
have effects across Europe. Investments in Europe are also subject to risks
stemming from the uncertain consequences of the United Kingdom's (“U.K.”) exit
of the EU single market and customs union (“Brexit”). Further, Russia's invasion
of the Ukraine, and the continued hostilities in the region, have caused
increased volatility in European markets and led to broad ranging economic
sanctions against Russia. Uncertainties surrounding the duration and potential
increased geographic scope of hostilities may create additional volatility in
European and global markets. Any of the above could have a negative effect on
the Fund's investments in Europe.
102 WisdomTree Trust Prospectus |
Investments
in the United Kingdom
Investments in the United Kingdom (“U.K.”) are
subject to risks associated with uncertainties surrounding Brexit and changes in
the economic health of its primary trade partners across Europe and the United
States. The U.K.’s economy is also heavily dependent on the export of financial
services and may be impacted by a slowdown in the financial services
sector.
Investments
in Switzerland
The Swiss economy is heavily dependent on the economies of
the United States and other European nations as key trading partners. In
particular, Switzerland depends on international trade and exports to generate
economic growth. As a result, future changes in the price or the demand for
Swiss products or services by these trading partners, or changes in these
countries’ economies, trade regulations or currency exchange rates could
adversely impact the Swiss economy.
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WisdomTree Trust Prospectus 103 |
■ | |
■ |
Year | Return |
2015 | |
2016 | |
2017 | |
2018 | - |
2019 | |
2020 | |
2021 | |
2022 | - |
The Fund’s
as of was .
Best and Worst Quarter Returns (for the periods reflected in the bar chart above)
Return | Quarter/Year | |
1Q/2019 | ||
1Q/2020 |
104 WisdomTree Trust Prospectus |
WisdomTree International Hedged Quality Dividend Growth Fund | 1 Year | 5 Years | Since
Inception |
Return Before Taxes Based on NAV | ( |
||
Return After Taxes on Distributions | ( |
||
Return After Taxes on Distributions and Sale of Fund Shares | ( |
||
WisdomTree International Hedged Quality Dividend Growth Index (Reflects no deduction for fees, expenses or taxes) | ( |
||
MSCI EAFE Local Currency Index (Reflects no deduction for fees, expenses or taxes) | ( |
Management
Investment Adviser and Sub-Adviser
WisdomTree Asset Management, Inc. (“WisdomTree Asset Management” or the “Adviser”) serves as investment adviser to the Fund. Mellon Investments Corporation (the “Sub-Adviser”) serves as sub-adviser to the Fund.
Portfolio Managers
The Fund is managed by the Sub-Adviser’s Equity Index Strategies Portfolio Management team. The individual members of the team jointly and primarily responsible for the day-to-day management of the Fund’s portfolio are identified below.
Marlene Walker-Smith, a Director, Head of Equity Index Portfolio Management, has been a portfolio manager of the Fund since October 2020.
David France, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Todd Frysinger, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Vlasta Sheremeta, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Michael Stoll, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Buying and Selling Fund Shares
The Fund is an ETF. This means that individual shares of the Fund are listed on a national securities exchange, such as NYSE Arca, and may only be purchased and sold in the secondary market through a broker-dealer at market prices. Because Fund shares trade at market prices rather than NAV, shares may trade at a price greater than NAV (premium) or less than NAV (discount). In addition, an investor may incur costs attributable to the difference between the highest price a buyer is willing to pay to purchase shares (bid) and the lowest price a seller is willing to accept for shares (ask) when buying and selling shares in the secondary market (the “bid/ask spread”). Recent information regarding the Fund, including its NAV, market price, premiums and discounts, and bid/ask spreads, is available on the Fund’s website at www.wisdomtree.com/investments.
The Fund issues and redeems shares at NAV only in large blocks of shares (“Creation Units”), which only certain institutions or large investors (typically market makers or other broker-dealers) may purchase or redeem. The Fund issues and redeems Creation Units in exchange for a portfolio of securities and/or U.S. cash.
Tax Information
The Fund intends to make distributions that may be taxed as ordinary income, qualified dividend income, or capital gains.
WisdomTree Trust Prospectus 105 |
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank) (an “Intermediary”), WisdomTree Asset Management or its affiliates may pay Intermediaries for certain activities related to the Fund, including participation in activities that are designed to make Intermediaries more knowledgeable about exchange-traded products, including the Fund, or for other activities, such as marketing, educational training or other initiatives related to the sale or promotion of Fund shares. These payments may create a conflict of interest by influencing the Intermediary and your salesperson to recommend the Fund over another investment. Any such arrangements do not result in increased Fund expenses. Ask your salesperson or visit the Intermediary’s website for more information.
106 WisdomTree Trust Prospectus |
The WisdomTree Global High Dividend Fund (the “Fund”) seeks to track the price and yield performance, before fees and expenses, of the WisdomTree Global High Dividend Index (the “Index”).
The following table describes the fees and expenses you may pay if you buy, hold and sell shares of the Fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example below. The fees are expressed as a percentage of the Fund’s average net assets.
Management Fees | |
Distribution and/or Service (12b-1) Fees | |
Other Expenses | |
Total Annual Fund Operating Expenses |
1 |
The following
example is intended to help retail investors compare the cost of investing in
the Fund with the cost of investing in other funds. It illustrates the
hypothetical expenses that such investors would incur over various periods if
they were to invest $10,000 in the Fund for the time periods indicated and then
redeem all of their shares at the end of those periods. This example assumes
that the Fund provides a return of 5% a year and that operating expenses remain
the same. This example does not include the brokerage commissions that retail
investors may pay to buy and sell shares of the Fund.
1 Year | 3 Years | 5 Years | 10 Years | |
$
|
$
|
$
|
$
|
The Fund pays
transaction costs, such as commissions, when it buys and sells securities (or
“turns over” its portfolio). A higher portfolio turnover rate may indicate
higher transaction costs and may result in higher taxes when Fund shares are
held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the example, affect the Fund’s performance. During the
most recent fiscal year, the Fund’s portfolio turnover rate was
The Fund employs a “passive management” – or indexing – investment approach designed to track the performance of the Index. The Fund generally uses a representative sampling strategy to achieve its investment objective, meaning it generally will invest in a sample of the securities in the Index whose risk, return and other characteristics resemble the risk, return and other characteristics of the Index as a whole. Under normal circumstances, at least 95% of the Fund’s total assets (exclusive of collateral held from securities lending) will be invested in component securities of the Index and investments that have economic characteristics that are substantially identical to the economic characteristics of such component securities.
The Index is a fundamentally weighted index that is comprised of high dividend-yielding companies selected from the WisdomTree Global Dividend Index, which defines the dividend-paying universe of companies in the U.S., developed countries and emerging markets throughout the world. To be eligible for inclusion in the Index, a company must meet the following criteria as of the annual Index screening date: (i) payment of at least $5 million in cash dividends on shares of common stock during the preceding annual cycle; (ii) market capitalization of at least $2 billion; (iii) median daily dollar trading volume of at least $100,000 for the preceding three months (at least $200,000 for each of the preceding six months for emerging markets); and (iv) for non-U.S. securities, trading of at least 250,000 shares per month for each of the preceding six months. Securities eligible for inclusion in the Index are ranked by dividend yield as adjusted by a composite risk score based on fundamental valuation, quality and momentum characteristics. Securities ranking in the highest 30% by dividend yield and top 80% by composite risk score are selected for inclusion in the Index. If a company currently in the Index is no longer ranked in the top 30% by dividend yield by region (i.e., U.S., developed and emerging markets) at the time of the annual Index screening date but remains ranked in the top 35% by dividend yield, the company will remain in the Index.
WisdomTree Trust Prospectus 107 |
Securities are weighted in the Index based on dividends paid over the prior annual cycle. Companies that pay a greater total dollar amount of dividends are more heavily weighted. To derive a company’s initial Index weight, (i) multiply the U.S. dollar value of the company’s annual gross dividend per share by the number of common shares outstanding for that company (the “Cash Dividend Factor”); (ii) calculate the Cash Dividend Factor for each company; (iii) add together all of the companies’ Cash Dividend Factors; and (iv) divide the company’s Cash Dividend Factor by the sum of all Cash Dividend Factors. On the Index’s annual screening date, the Index caps the weight of components exposed to any one country and any one sector (except for the real estate sector) at 25%. The weight of components exposed to the real estate sector is capped at 15%. The Index also may adjust the weight of individual components on the annual screening date based on certain quantitative thresholds or limits tied to key metrics of a component security, such as its trading volume. To the extent the Index reduces an individual component’s weight, the excess weight will be reallocated pro rata among the other components. Similarly, if the Index increases a component’s weight, the weight of the other components will be reduced on a pro rata basis to contribute the weight needed for such increase. The weight of a sector, country, or individual component in the Index may fluctuate above or below specified caps and thresholds, respectively, between screening dates in response to market conditions. As of the date of this Prospectus, non-U.S. equity securities comprise at least 40% of the Index, and WisdomTree Asset Management, Inc., the Fund’s investment adviser, expects that, under normal circumstances, non-U.S. equity securities will comprise at least 40% of the Fund.
WisdomTree, Inc. (“WisdomTree”), as Index provider, currently uses the Global Industry Classification Standard (GICS®), a widely recognized industry classification methodology developed by MSCI, Inc. and Standard & Poor’s Financial Services LLC, to define companies within a sector. The following sectors are included in the Index: communication services, consumer discretionary, consumer staples, energy, financials, health care, industrials, information technology, materials, real estate, and utilities. A sector is comprised of multiple industries. For example, the energy sector is comprised of companies in the energy equipment and services industry as well as the oil, gas and consumable fuels industry. As of June 30, 2023, companies in the financials sector comprised a significant portion (i.e., in excess of 15% of the Index’s total weighting) of the Index; however, the Index's sector exposure may change from time to time.
As of June 30, 2023, the equity securities of companies domiciled in or otherwise tied to Europe (including exposure to the United Kingdom) comprised a significant portion (i.e., in excess of 15% of the Index’s total weighting) of the Index, although the Index’s geographic exposure may change from time to time.
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108 WisdomTree Trust Prospectus |
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WisdomTree Trust Prospectus 109 |
Investments
in Europe
Many European countries are members of the European Union
(“EU”) as well as the European Economic and Monetary Union (“EMU”) and, as a
result, the economies and markets of European countries can be closely connected
and largely interdependent. As such, adverse events in one European country may
have effects across Europe. Investments in Europe are also subject to risks
stemming from the uncertain consequences of the United Kingdom's (“U.K.”) exit
of the EU single market and customs union (“Brexit”). Further, Russia's invasion
of the Ukraine, and the continued hostilities in the region, have caused
increased volatility in European markets and led to broad ranging economic
sanctions against Russia. Uncertainties surrounding the duration and potential
increased geographic scope of hostilities may create additional volatility in
European and global markets. Any of the above could have a negative effect on
the Fund's investments in Europe.
Investments
in the United Kingdom
Investments in the United Kingdom (“U.K.”) are
subject to risks associated with uncertainties surrounding Brexit and changes in
the economic health of its primary trade partners across Europe and the United
States. The U.K.'s economy is also heavily dependent on the export of financial
services and may be impacted by a slowdown in the financial services
sector.
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110 WisdomTree Trust Prospectus |
Year | Return |
2013 | |
2014 | - |
2015 | - |
2016 | |
2017 | |
2018 | - |
2019 | |
2020 | - |
2021 | |
2022 | - |
The Fund’s
as of was .
Best and Worst Quarter Returns (for the periods reflected in the bar chart above)
Return | Quarter/Year | |
4Q/2020 | ||
1Q/2020 |
WisdomTree Global High Dividend Fund | 1 Year | 5 Years | 10 Years |
Return Before Taxes Based on NAV | ( |
||
Return After Taxes on Distributions | ( |
||
Return After Taxes on Distributions and Sale of Fund Shares | ( |
||
WisdomTree Global High Dividend Index (Reflects no deduction for fees, expenses or taxes) | ( |
||
MSCI AC World Index (Reflects no deduction for fees, expenses or taxes) | ( |
Management
Investment Adviser and Sub-Adviser
WisdomTree Asset Management, Inc. (“WisdomTree Asset Management” or the “Adviser”) serves as investment adviser to the Fund. Mellon Investments Corporation (the “Sub-Adviser”) serves as sub-adviser to the Fund.
WisdomTree Trust Prospectus 111 |
Portfolio Managers
The Fund is managed by the Sub-Adviser’s Equity Index Strategies Portfolio Management team. The individual members of the team jointly and primarily responsible for the day-to-day management of the Fund’s portfolio are identified below.
Marlene Walker-Smith, a Director, Head of Equity Index Portfolio Management, has been a portfolio manager of the Fund since October 2020.
David France, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Todd Frysinger, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Vlasta Sheremeta, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Michael Stoll, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Buying and Selling Fund Shares
The Fund is an ETF. This means that individual shares of the Fund are listed on a national securities exchange, such as NYSE Arca, and may only be purchased and sold in the secondary market through a broker-dealer at market prices. Because Fund shares trade at market prices rather than NAV, shares may trade at a price greater than NAV (premium) or less than NAV (discount). In addition, an investor may incur costs attributable to the difference between the highest price a buyer is willing to pay to purchase shares (bid) and the lowest price a seller is willing to accept for shares (ask) when buying and selling shares in the secondary market (the “bid/ask spread”). Recent information regarding the Fund, including its NAV, market price, premiums and discounts, and bid/ask spreads, is available on the Fund’s website at www.wisdomtree.com/investments.
The Fund issues and redeems shares at NAV only in large blocks of shares (“Creation Units”), which only certain institutions or large investors (typically market makers or other broker-dealers) may purchase or redeem. The Fund issues and redeems Creation Units in exchange for a portfolio of securities and/or U.S. cash.
Tax Information
The Fund intends to make distributions that may be taxed as ordinary income, qualified dividend income, or capital gains.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank) (an “Intermediary”), WisdomTree Asset Management or its affiliates may pay Intermediaries for certain activities related to the Fund, including participation in activities that are designed to make Intermediaries more knowledgeable about exchange-traded products, including the Fund, or for other activities, such as marketing, educational training or other initiatives related to the sale or promotion of Fund shares. These payments may create a conflict of interest by influencing the Intermediary and your salesperson to recommend the Fund over another investment. Any such arrangements do not result in increased Fund expenses. Ask your salesperson or visit the Intermediary’s website for more information.
112 WisdomTree Trust Prospectus |
The WisdomTree Global ex-U.S. Quality Dividend Growth Fund (the “Fund”) seeks to track the price and yield performance, before fees and expenses, of the WisdomTree Global ex-U.S. Quality Dividend Growth Index (the “Index”).
The following table describes the fees and expenses you may pay if you buy, hold and sell shares of the Fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example below. The fees are expressed as a percentage of the Fund’s average net assets.
Management Fees | |
Distribution and/or Service (12b-1) Fees | |
Other Expenses | |
Total Annual Fund Operating Expenses |
1 |
The following
example is intended to help retail investors compare the cost of investing in
the Fund with the cost of investing in other funds. It illustrates the
hypothetical expenses that such investors would incur over various periods if
they were to invest $10,000 in the Fund for the time periods indicated and then
redeem all of their shares at the end of those periods. This example assumes
that the Fund provides a return of 5% a year and that operating expenses remain
the same. This example does not include the brokerage commissions that retail
investors may pay to buy and sell shares of the Fund.
1 Year | 3 Years | 5 Years | 10 Years | |
$
|
$
|
$
|
$
|
The Fund pays
transaction costs, such as commissions, when it buys and sells securities (or
“turns over” its portfolio). A higher portfolio turnover rate may indicate
higher transaction costs and may result in higher taxes when Fund shares are
held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the example, affect the Fund’s performance. During the
most recent fiscal year, the Fund’s portfolio turnover rate was
The Fund employs a “passive management” – or indexing – investment approach designed to track the performance of the Index. The Fund generally uses a representative sampling strategy to achieve its investment objective, meaning it generally will invest in a sample of the securities in the Index whose risk, return and other characteristics resemble the risk, return and other characteristics of the Index as a whole. Under normal circumstances, at least 95% of the Fund’s total assets (exclusive of collateral held from securities lending) will be invested in component securities of the Index and investments that have economic characteristics that are substantially identical to the economic characteristics of such component securities.
The Index is a fundamentally weighted index that consists of dividend-paying global ex-U.S. common stocks with growth characteristics. The Index is comprised of the 300 companies in the WisdomTree Global ex-U.S. Dividend Index, which defines the dividend-paying universe of companies in developed countries and emerging markets throughout the world, excluding the United States, with the best combined rank of growth and quality factors, specifically: medium-term earnings growth expectations, return on equity, and return on assets. To be eligible for inclusion in the Index, a company must meet the following criteria as of the annual Index screening date: (i) payment of at least $5 million in gross cash dividends on common shares during the preceding annual cycle; (ii) market capitalization of at least $2 billion; (iii) median daily dollar trading volume of at least $100,000 for the preceding three months; and (iv) an earnings yield greater than the dividend yield.
WisdomTree Trust Prospectus 113 |
Securities are weighted in the Index based on dividends over the prior annual cycle. Companies that pay a greater total dollar amount of dividends are more heavily weighted. To derive a company’s initial Index weight, (i) multiply the U.S. dollar value of the company’s annual gross dividend per share by the number of common shares outstanding for that company (the “Cash Dividend Factor”); (ii) calculate the Cash Dividend Factor for each company; (iii) add together all of the companies’ Cash Dividend Factors; and (iv) divide the company’s Cash Dividend Factor by the sum of all Cash Dividend Factors. On the Index’s annual screening date, the maximum weight of any security in the Index is capped at 5%, and the Index caps the weight of components exposed to any one country and any one sector (except for the real estate sector) at 20%. The weight of components exposed to the real estate sector is capped at 15%. The Index also may adjust the weight of individual components on the annual screening date based on certain quantitative thresholds or limits tied to key metrics of a component security, such as its trading volume. To the extent the Index reduces an individual component’s weight, the excess weight will be reallocated pro rata among the other components. Similarly, if the Index increases a component’s weight, the weight of the other components will be reduced on a pro rata basis to contribute the weight needed for such increase. The weight of a sector, country, or individual component in the Index may fluctuate above or below specified caps and thresholds, respectively, between screening dates in response to market conditions.
WisdomTree, Inc. (“WisdomTree”), as Index provider, currently uses the Global Industry Classification Standard (GICS®), a widely recognized industry classification methodology developed by MSCI, Inc. and Standard & Poor’s Financial Services LLC, to define companies within a sector. The following sectors are included in the Index: communication services, consumer discretionary, consumer staples, energy, financials, health care, industrials, information technology, materials, real estate, and utilities. A sector is comprised of multiple industries. For example, the energy sector is comprised of companies in the energy equipment and services industry as well as the oil, gas and consumable fuels industry. As of June 30, 2023, companies in the information technology, consumer discretionary and consumer staples sectors comprised a significant portion (i.e., in excess of 15% of the Index’s total weighting) of the Index; however, the Index's sector exposure may change from time to time.
As of June 30, 2023, the equity securities of companies domiciled in or otherwise tied to Europe, particularly the United Kingdom, comprised a significant portion (i.e., in excess of 15% of the Index’s total weighting) of the Index, although the Index’s geographic exposure may change from time to time.
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114 WisdomTree Trust Prospectus |
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WisdomTree Trust Prospectus 115 |
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Investments
in Europe
Many European countries are members of the European Union
(“EU”) as well as the European Economic and Monetary Union (“EMU”) and, as a
result, the economies and markets of European countries can be closely connected
and largely interdependent. As such, adverse events in one European country may
have effects across Europe. Investments in Europe are also subject to risks
stemming from the uncertain consequences of the United Kingdom's (“U.K.”) exit
of the EU single market and customs union (“Brexit”). Further, Russia's invasion
of the Ukraine, and the continued hostilities in the region, have caused
increased volatility in European markets and led to broad ranging economic
sanctions against Russia. Uncertainties surrounding the duration and potential
increased geographic scope of hostilities may create additional volatility in
European and global markets. Any of the above could have a negative effect on
the Fund's investments in Europe.
Investments
in the United Kingdom
Investments in the United Kingdom (“U.K.”) are
subject to risks associated with uncertainties surrounding Brexit and changes in
the economic health of its primary trade partners across Europe and the United
States. The U.K.’s economy is also heavily dependent on the export of financial
services and may be impacted by a slowdown in the financial services
sector.
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116 WisdomTree Trust Prospectus |
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Year | Return |
2013 | |
2014 | - |
2015 | - |
2016 | |
2017 | |
2018 | - |
2019 | |
2020 | |
2021 | |
2022 | - |
The Fund’s
as of was .
WisdomTree Trust Prospectus 117 |
Best and Worst Quarter Returns (for the periods reflected in the bar chart above)
Return | Quarter/Year | |
2Q/2020 | ||
2Q/2022 |
WisdomTree Global ex-U.S. Quality Dividend Growth Fund | 1 Year | 5 Years | 10 Years |
Return Before Taxes Based on NAV | ( |
||
Return After Taxes on Distributions | ( |
||
Return After Taxes on Distributions and Sale of Fund Shares | ( |
||
WisdomTree Global ex-U.S. Quality Dividend Growth Index (Reflects no deduction for fees, expenses or taxes) | ( |
||
MSCI AC World ex-USA Index (Reflects no deduction for fees, expenses or taxes) | ( |
Management
Investment Adviser and Sub-Adviser
WisdomTree Asset Management, Inc. (“WisdomTree Asset Management” or the “Adviser”) serves as investment adviser to the Fund. Mellon Investments Corporation (the “Sub-Adviser”) serves as sub-adviser to the Fund.
Portfolio Managers
The Fund is managed by the Sub-Adviser’s Equity Index Strategies Portfolio Management team. The individual members of the team jointly and primarily responsible for the day-to-day management of the Fund’s portfolio are identified below.
Marlene Walker-Smith, a Director, Head of Equity Index Portfolio Management, has been a portfolio manager of the Fund since October 2020.
David France, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Todd Frysinger, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Vlasta Sheremeta, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Michael Stoll, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Buying and Selling Fund Shares
The Fund is an ETF. This means that individual shares of the Fund are listed on a national securities exchange, such as NYSE Arca, and may only be purchased and sold in the secondary market through a broker-dealer at market prices. Because Fund shares trade at market prices rather than NAV, shares may trade at a price greater than NAV (premium) or less than NAV (discount). In addition, an investor may incur costs attributable to the difference between the highest price a buyer is willing to pay to purchase shares (bid) and the lowest price a seller is willing to accept for shares (ask) when buying and selling shares in the secondary market (the “bid/ask spread”). Recent information regarding the Fund, including its NAV, market price, premiums and discounts, and bid/ask spreads, is available on the Fund’s website at www.wisdomtree.com/investments.
118 WisdomTree Trust Prospectus |
The Fund issues and redeems shares at NAV only in large blocks of shares (“Creation Units”), which only certain institutions or large investors (typically market makers or other broker-dealers) may purchase or redeem. The Fund issues and redeems Creation Units in exchange for a portfolio of securities and/or U.S. cash.
Tax Information
The Fund intends to make distributions that may be taxed as ordinary income, qualified dividend income, or capital gains.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank) (an “Intermediary”), WisdomTree Asset Management or its affiliates may pay Intermediaries for certain activities related to the Fund, including participation in activities that are designed to make Intermediaries more knowledgeable about exchange-traded products, including the Fund, or for other activities, such as marketing, educational training or other initiatives related to the sale or promotion of Fund shares. These payments may create a conflict of interest by influencing the Intermediary and your salesperson to recommend the Fund over another investment. Any such arrangements do not result in increased Fund expenses. Ask your salesperson or visit the Intermediary’s website for more information.
WisdomTree Trust Prospectus 119 |
The WisdomTree New Economy Real Estate Fund (the “Fund”) seeks to track the price and yield performance, before fees and expenses, of the CenterSquare New Economy Real Estate Index (the “Index”).
The following table describes the fees and expenses you may pay if you buy, hold and sell shares of the Fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example below. The fees are expressed as a percentage of the Fund’s average net assets.
Management Fees | |
Distribution and/or Service (12b-1) Fees | |
Other Expenses | |
Total Annual Fund Operating Expenses |
1 |
The following
example is intended to help retail investors compare the cost of investing in
the Fund with the cost of investing in other funds. It illustrates the
hypothetical expenses that such investors would incur over various periods if
they were to invest $10,000 in the Fund for the time periods indicated and then
redeem all of their shares at the end of those periods. This example assumes
that the Fund provides a return of 5% a year and that operating expenses remain
the same. This example does not include the brokerage commissions that retail
investors may pay to buy and sell shares of the Fund.
1 Year | 3 Years | 5 Years | 10 Years | |
$
|
$
|
$
|
$
|
The Fund pays
transaction costs, such as commissions, when it buys and sells securities (or
“turns over” its portfolio). A higher portfolio turnover rate may indicate
higher transaction costs and may result in higher taxes when Fund shares are
held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the example, affect the Fund’s performance. During the
most recent fiscal year, the Fund’s portfolio turnover rate was
The Fund employs a “passive management” – or indexing – investment approach designed to track the performance of the Index. The Fund generally uses a representative sampling strategy to achieve its investment objective, meaning it generally will invest in a sample of the securities in the Index whose risk, return and other characteristics resemble the risk, return and other characteristics of the Index as a whole. Under normal circumstances, at least 80% of the Fund’s total assets (exclusive of collateral held from securities lending) will be invested in component securities of the Index and investments that have economic characteristics that are substantially identical to the economic characteristics of such component securities.
The Index is provided by CenterSquare Investment Management LLC (“CenterSquare”). The Index selects constituents from a parent universe of global equity securities, including American Depositary Receipts (“ADRs”), of listed real estate investment trusts (“REITs”) and companies identified as being significantly real estate related. Real estate-related companies are companies that derive at least 75% of their revenue from real estate rental revenue or from supplying goods or services to commercial or residential property owners that relate to the development, management, maintenance, lease, rental, or sale of such real estate. To be eligible for inclusion in the Index, a security must: (i) have a market capitalization of at least $500 million; (ii) have a 90-day average trading volume above $4 million per day; and (iii) list shares on a national stock exchange in the United States, Australia, Canada, Europe (i.e., Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, or the United Kingdom), Hong Kong, Israel, or Singapore, or on the Tokyo Stock Exchange.
120 WisdomTree Trust Prospectus |
The eligible constituents are then further screened based on a proprietary technology score (described below) and a leverage screening to identify REITs and companies identified as being significantly real estate related, which are exposed to the technology and science-related aspects of the “new economy.” The “new economy” is comprised of companies associated with cloud computing, logistics and supply chain management, and life sciences. The Index is comprised of companies that derive at least 50% of their revenues or profits from, or invest at least 50% of their assets in, products or services related to the new economy.
Each constituent is assigned a technology score based on various factors, including (1) the amount of revenue generated from research and development (R&D), telecommunications, or other activities related to the technology and life science industries, either directly from the company’s operations or indirectly through its lease of real estate to tenants engaged in such activities, and (2) the extent to which the constituent and/or its tenants enable or are exposed to the sciences, e-commerce, and/or new economy logistics, including supply chain and warehouse management. The Index selects the highest scoring constituents for inclusion in the Index by performing analysis and assigning a value to pre-defined evaluation criteria for each constituent.
Constituents are then further screened to eliminate highly levered companies with debt to total market capitalization above 70%.
The output of the above screening process creates the Index’s investable universe of securities. In accordance with its rules-based methodology, the Index selects the constituents with the highest technology scores for inclusion in the Index. The initial weights of the remaining constituents are determined by the free float market capitalizations of the securities. These weights are then adjusted using a formula that reweights the constituents based on a combination of the technology score described above and the constituent’s growth and valuation rank (collectively referred to as the “New Economy Score”). As a result, securities with strong growth and/or value characteristics, in accordance with the Index, are overweighted in the Index based on their New Economy Scores. The weight of any single security in the Index is limited to no more than 7.5% at the time of the Index rebalance.
The Index is reconstituted and rebalanced on a semi-annual basis.
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WisdomTree Trust Prospectus 121 |
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122 WisdomTree Trust Prospectus |
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WisdomTree Trust Prospectus 123 |
The Fund’s name, investment objective and strategies changed effective April 20, 2022. Fund performance prior to April 20, 2022 reflects the Fund’s investment objective and strategies when it sought to provide returns that corresponded to the performance of the WisdomTree Global ex-U.S. Real Estate Index.
Year | Return |
2013 | - |
2014 | |
2015 | - |
2016 | |
2017 | |
2018 | - |
2019 | |
2020 | - |
2021 | |
2022 | - |
The Fund’s
as of was .
Best and Worst Quarter Returns (for the periods reflected in the bar chart above)
Return | Quarter/Year | |
1Q/2019 | ||
1Q/2020 |
WisdomTree New Economy Real Estate Fund* | 1 Year | 5 Years | 10 Years |
Return Before Taxes Based on NAV | ( |
( |
( |
Return After Taxes on Distributions | ( |
( |
( |
Return After Taxes on Distributions and Sale of Fund Shares | ( |
( |
( |
WisdomTree Global ex-U.S. Real Estate/CenterSquare New Economy Real Estate Spliced Index** (Reflects no deduction for fees, expenses or taxes) | ( |
( |
( |
Dow Jones Global ex-U.S. Select Real Estate Securities Index/MSCI World Real Estate Investment Trust USD Spliced Index*** (Reflects no deduction for fees, expenses or taxes) | ( |
( |
( |
MSCI AC World ex-USA Index (Reflects no deduction for fees, expenses or taxes) | ( |
* | |
** | |
*** |
Management
Investment Adviser and Sub-Adviser
WisdomTree Asset Management, Inc. (“WisdomTree Asset Management” or the “Adviser”) serves as investment adviser to the Fund. Mellon Investments Corporation (the “Sub-Adviser”) serves as sub-adviser to the Fund.
124 WisdomTree Trust Prospectus |
Portfolio Managers
The Fund is managed by the Sub-Adviser’s Equity Index Strategies Portfolio Management team. The individual members of the team jointly and primarily responsible for the day-to-day management of the Fund’s portfolio are identified below.
Marlene Walker-Smith, a Director, Head of Equity Index Portfolio Management , has been a portfolio manager of the Fund since October 2020.
David France, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Todd Frysinger, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Vlasta Sheremeta, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Michael Stoll, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Buying and Selling Fund Shares
The Fund is an ETF. This means that individual shares of the Fund are listed on a national securities exchange, such as NYSE Arca, and may only be purchased and sold in the secondary market through a broker-dealer at market prices. Because Fund shares trade at market prices rather than NAV, shares may trade at a price greater than NAV (premium) or less than NAV (discount). In addition, an investor may incur costs attributable to the difference between the highest price a buyer is willing to pay to purchase shares (bid) and the lowest price a seller is willing to accept for shares (ask) when buying and selling shares in the secondary market (the “bid/ask spread”). Recent information regarding the Fund, including its NAV, market price, premiums and discounts, and bid/ask spreads, is available on the Fund’s website at www.wisdomtree.com/investments.
The Fund issues and redeems shares at NAV only in large blocks of shares (“Creation Units”), which only certain institutions or large investors (typically market makers or other broker-dealers) may purchase or redeem. The Fund issues and redeems Creation Units in exchange for a portfolio of securities and/or U.S. cash.
Tax Information
The Fund intends to make distributions that may be taxed as ordinary income, qualified dividend income, or capital gains.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank) (an “Intermediary”), WisdomTree Asset Management or its affiliates may pay Intermediaries for certain activities related to the Fund, including participation in activities that are designed to make Intermediaries more knowledgeable about exchange-traded products, including the Fund, or for other activities, such as marketing, educational training or other initiatives related to the sale or promotion of Fund shares. These payments may create a conflict of interest by influencing the Intermediary and your salesperson to recommend the Fund over another investment. Any such arrangements do not result in increased Fund expenses. Ask your salesperson or visit the Intermediary’s website for more information.
WisdomTree Trust Prospectus 125 |
The WisdomTree Emerging Markets High Dividend Fund (the “Fund”) seeks to track the price and yield performance, before fees and expenses, of the WisdomTree Emerging Markets High Dividend Index (the “Index”).
The following table describes the fees and expenses you may pay if you buy, hold and sell shares of the Fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example below. The fees are expressed as a percentage of the Fund’s average net assets.
Management Fees | |
Distribution and/or Service (12b-1) Fees | |
Other Expenses | |
Total Annual Fund Operating Expenses |
1 |
The following
example is intended to help retail investors compare the cost of investing in
the Fund with the cost of investing in other funds. It illustrates the
hypothetical expenses that such investors would incur over various periods if
they were to invest $10,000 in the Fund for the time periods indicated and then
redeem all of their shares at the end of those periods. This example assumes
that the Fund provides a return of 5% a year and that operating expenses remain
the same. This example does not include the brokerage commissions that retail
investors may pay to buy and sell shares of the Fund.
1 Year | 3 Years | 5 Years | 10 Years | |
$
|
$
|
$
|
$
|
The Fund pays
transaction costs, such as commissions, when it buys and sells securities (or
“turns over” its portfolio). A higher portfolio turnover rate may indicate
higher transaction costs and may result in higher taxes when Fund shares are
held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the example, affect the Fund’s performance. During the
most recent fiscal year, the Fund’s portfolio turnover rate was
The Fund employs a “passive management” – or indexing – investment approach designed to track the performance of the Index. The Fund generally uses a representative sampling strategy to achieve its investment objective, meaning it generally will invest in a sample of the securities in the Index whose risk, return and other characteristics resemble the risk, return and other characteristics of the Index as a whole. Under normal circumstances, at least 95% of the Fund’s total assets (exclusive of collateral held from securities lending) will be invested in component securities of the Index and investments that have economic characteristics that are substantially identical to the economic characteristics of such component securities.
The Index is a fundamentally weighted index that is comprised of the highest dividend-yielding common stocks selected from the WisdomTree Emerging Markets Dividend Index, which defines the dividend-paying universe of companies in emerging markets throughout the world. To be eligible for inclusion in the WisdomTree Emerging Markets Dividend Index, a company must meet the following criteria as of the annual Index screening date: (i) payment of at least $5 million in cash dividends on common shares during the preceding annual cycle; (ii) market capitalization of at least $200 million; (iii) median daily dollar trading volume of at least $200,000 for each of the preceding six months; (iv) incorporation within one of 18 emerging market nations (Brazil, Chile, China, Czech Republic, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Philippines, Poland, Russia, Saudi Arabia, South Africa, Taiwan, Thailand, and Turkey); and (v) trading of at least 250,000 shares per month for each of the preceding six months. Securities eligible for inclusion in the WisdomTree Emerging Markets Dividend Index are ranked by dividend yield. Securities ranking in the highest 30% by dividend yield are selected for inclusion within the Index. If a company currently in the Index is no longer ranked in the top 30% by dividend yield at the time of the annual Index screening date but remains ranked in the top 35% by dividend yield, the company will remain in the Index.
126 WisdomTree Trust Prospectus |
Securities are weighted in the Index based on dividends paid over the prior annual cycle. Companies that pay a greater total dollar amount of dividends are more heavily weighted. To derive a company’s initial Index weight, (i) multiply the U.S. dollar value of the company’s annual gross dividend per share by the number of common shares outstanding for that company (the “Cash Dividend Factor”); (ii) calculate the Cash Dividend Factor for each company; (iii) add together all of the companies’ Cash Dividend Factors; and (iv) divide the company’s Cash Dividend Factor by the sum of all Cash Dividend Factors. At the time of the Index’s annual screening date, the maximum weight of any security in the Index is capped at 5%. On the Index’s annual screening date, the Index caps the weight of components exposed to any one country and any one sector (except for the real estate sector) at 25%. The weight of components exposed to the real estate sector is capped at 15%. The Index also may adjust the weight of individual components on the annual screening date based on certain quantitative thresholds or limits tied to key metrics of a component security, such as its trading volume. To the extent the Index reduces an individual component’s weight, the excess weight will be reallocated pro rata among the other components. Similarly, if the Index increases a component’s weight, the weight of the other components will be reduced on a pro rata basis to contribute the weight needed for such increase. The weight of a sector, country, or individual component in the Index may fluctuate above or below specified caps and thresholds, respectively, between screening dates in response to market conditions.
WisdomTree, Inc. (“WisdomTree”), as Index provider, currently uses the Global Industry Classification Standard (GICS®), a widely recognized industry classification methodology developed by MSCI, Inc. and Standard & Poor’s Financial Services LLC, to define companies within a sector. The following sectors are included in the Index: communication services, consumer discretionary, consumer staples, energy, financials, health care, industrials, information technology, materials, real estate, and utilities. A sector is comprised of multiple industries. For example, the energy sector is comprised of companies in the energy equipment and services industry as well as the oil, gas and consumable fuels industry. As of June 30, 2023, companies in the financials, information technology, materials and energy sectors comprised a significant portion (i.e., in excess of 15% of the Index’s total weighting) of the Index; however, the Index's sector exposure may change from time to time.
As of June 30, 2023, the equity securities of companies domiciled in or otherwise tied to Taiwan and China comprised a significant portion (i.e., in excess of 15% of the Index’s total weighting) of the Index, although the Index’s geographic exposure may change from time to time.
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WisdomTree Trust Prospectus 127 |
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■ | |
■ | |
■ | |
■ | |
■ | |
■ | |
■ |
128 WisdomTree Trust Prospectus |
■ | |
■ | |
■ |
Investments
in Taiwan
The economy of Taiwan is heavily dependent on exports. Currency
fluctuations, increasing competition from Asia’s other emerging economies, and
conditions that weaken demand for Taiwan’s export products worldwide could have
a negative impact on the Taiwanese economy as a whole. Concerns over Taiwan’s
history of political contention and its current relationship with China may also
have a significant impact on the economy of Taiwan.
Investments
in China
China may be subject to considerable degrees of economic,
political and social instability. The Chinese market remains a developing market
and may be subject to significantly higher volatility in comparison to those of
more developed markets. While the Chinese government has implemented economic
and market reforms, the government continues to exert substantial influence over
Chinese markets and the economy as a whole. Internal social unrest or
confrontations with neighboring countries, including military conflicts in
response to such events, may also disrupt economic development in China and
result in a greater risk of currency fluctuations, currency non-convertibility,
interest rate fluctuations and higher rates of inflation. Additionally, China is
alleged to have participated in state-sponsored cyberattacks against foreign
companies and foreign governments. Actual and threatened responses to such
activity and strained international relations, including purchasing
restrictions, sanctions, tariffs or cyberattacks on the Chinese government or
Chinese companies, may impact China’s economy and Chinese issuers of securities
in which the Fund invests. The Chinese economy may also experience slower growth
if global or domestic demand for Chinese goods decreases significantly and/or
key trading partners apply trade tariffs or implement other protectionist
measures.
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WisdomTree Trust Prospectus 129 |
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130 WisdomTree Trust Prospectus |
Year | Return |
2013 | - |
2014 | - |
2015 | - |
2016 | |
2017 | |
2018 | - |
2019 | |
2020 | - |
2021 | |
2022 | - |
The Fund’s
as of was .
Best and Worst Quarter Returns (for the periods reflected in the bar chart above)
Return | Quarter/Year | |
4Q/2020 | ||
1Q/2020 |
WisdomTree Emerging Markets High Dividend Fund | 1 Year | 5 Years | 10 Years |
Return Before Taxes Based on NAV | ( |
||
Return After Taxes on Distributions | ( |
( |
( |
Return After Taxes on Distributions and Sale of Fund Shares | ( |
||
WisdomTree Emerging Markets High Dividend Index (Reflects no deduction for fees, expenses or taxes) | ( |
||
MSCI Emerging Markets Index (Reflects no deduction for fees, expenses or taxes) | ( |
( |
|
MSCI Emerging Markets Value Index (Reflects no deduction for fees, expenses or taxes) | ( |
( |
WisdomTree Trust Prospectus 131 |
Management
Investment Adviser and Sub-Adviser
WisdomTree Asset Management, Inc. (“WisdomTree Asset Management” or the “Adviser”) serves as investment adviser to the Fund. Mellon Investments Corporation (the “Sub-Adviser”) serves as sub-adviser to the Fund.
Portfolio Managers
The Fund is managed by the Sub-Adviser’s Equity Index Strategies Portfolio Management team. The individual members of the team jointly and primarily responsible for the day-to-day management of the Fund’s portfolio are identified below.
Marlene Walker-Smith, a Director, Head of Equity Index Portfolio Management, has been a portfolio manager of the Fund since October 2020.
David France, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Todd Frysinger, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Vlasta Sheremeta, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Michael Stoll, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Buying and Selling Fund Shares
The Fund is an ETF. This means that individual shares of the Fund are listed on a national securities exchange, such as NYSE Arca, and may only be purchased and sold in the secondary market through a broker-dealer at market prices. Because Fund shares trade at market prices rather than NAV, shares may trade at a price greater than NAV (premium) or less than NAV (discount). In addition, an investor may incur costs attributable to the difference between the highest price a buyer is willing to pay to purchase shares (bid) and the lowest price a seller is willing to accept for shares (ask) when buying and selling shares in the secondary market (the “bid/ask spread”). Recent information regarding the Fund, including its NAV, market price, premiums and discounts, and bid/ask spreads, is available on the Fund’s website at www.wisdomtree.com/investments.
The Fund issues and redeems shares at NAV only in large blocks of shares (“Creation Units”), which only certain institutions or large investors (typically market makers or other broker-dealers) may purchase or redeem. The Fund issues and redeems Creation Units in exchange for a portfolio of securities and/or U.S. cash.
Tax Information
The Fund intends to make distributions that may be taxed as ordinary income, qualified dividend income, or capital gains.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank) (an “Intermediary”), WisdomTree Asset Management or its affiliates may pay Intermediaries for certain activities related to the Fund, including participation in activities that are designed to make Intermediaries more knowledgeable about exchange-traded products, including the Fund, or for other activities, such as marketing, educational training or other initiatives related to the sale or promotion of Fund shares. These payments may create a conflict of interest by influencing the Intermediary and your salesperson to recommend the Fund over another investment. Any such arrangements do not result in increased Fund expenses. Ask your salesperson or visit the Intermediary’s website for more information.
132 WisdomTree Trust Prospectus |
The WisdomTree Emerging Markets SmallCap Dividend Fund (the “Fund”) seeks to track the price and yield performance, before fees and expenses, of the WisdomTree Emerging Markets SmallCap Dividend Index (the “Index”).
The following table describes the fees and expenses you may pay if you buy, hold and sell shares of the Fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example below. The fees are expressed as a percentage of the Fund’s average net assets.
Management Fees | |
Distribution and/or Service (12b-1) Fees | |
Other Expenses | |
Total Annual Fund Operating Expenses |
The following
example is intended to help retail investors compare the cost of investing in
the Fund with the cost of investing in other funds. It illustrates the
hypothetical expenses that such investors would incur over various periods if
they were to invest $10,000 in the Fund for the time periods indicated and then
redeem all of their shares at the end of those periods. This example assumes
that the Fund provides a return of 5% a year and that operating expenses remain
the same. This example does not include the brokerage commissions that retail
investors may pay to buy and sell shares of the Fund.
1 Year | 3 Years | 5 Years | 10 Years | |
$
|
$
|
$
|
$
|
The Fund pays
transaction costs, such as commissions, when it buys and sells securities (or
“turns over” its portfolio). A higher portfolio turnover rate may indicate
higher transaction costs and may result in higher taxes when Fund shares are
held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the example, affect the Fund’s performance. During the
most recent fiscal year, the Fund’s portfolio turnover rate was
The Fund employs a “passive management” – or indexing – investment approach designed to track the performance of the Index. The Fund generally uses a representative sampling strategy to achieve its investment objective, meaning it generally will invest in a sample of the securities in the Index whose risk, return and other characteristics resemble the risk, return and other characteristics of the Index as a whole. Under normal circumstances, at least 95% of the Fund’s total assets (exclusive of collateral held from securities lending) will be invested in component securities of the Index and investments that have economic characteristics that are substantially identical to the economic characteristics of such component securities.
The Index is a fundamentally weighted index that is comprised of small cap common stocks selected from the WisdomTree Emerging Markets Dividend Index, which defines the dividend-paying universe of companies in emerging markets throughout the world. Companies included in the Index fall within the bottom 10% of total market capitalization of the WisdomTree Emerging Markets Dividend Index as of the annual Index screening date. If a company currently in the Index is no longer ranked in the bottom 10% of total market capitalization of the WisdomTree Emerging Markets Dividend Index at the time of the annual Index screening date but remains ranked within the bottom 13% of total market capitalization of the WisdomTree Emerging Markets Dividend Index, the company will remain in the Index. As of June 30, 2023, the Index had a market capitalization range from $144 million to $16.1 billion, with an average market capitalization of $1.5 billion. To be eligible for inclusion in the WisdomTree Emerging Markets Dividend Index, a company must meet the following criteria as of the annual Index screening date: (i) payment of at least $5 million in cash dividends on common shares during the preceding in the annual cycle; (ii) market capitalization of at least $200 million; (iii) median daily dollar trading volume of at least $200,000 for each of the preceding six months; (iv) incorporation within one of 18 emerging market nations (Brazil, Chile, China, Czech Republic, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Philippines, Poland, Russia, Saudi Arabia, South Africa, Taiwan, Thailand, and Turkey); and (v) trading of at least 250,000 shares per month for each of the preceding six months.
WisdomTree Trust Prospectus 133 |
Securities are weighted in the Index based on dividends paid over the prior annual cycle. Companies that pay a greater total dollar amount of dividends are more heavily weighted. To derive a company’s initial Index weight, (i) multiply the U.S. dollar value of the company’s annual gross dividend per share by the number of common shares outstanding for that company (the “Cash Dividend Factor”); (ii) calculate the Cash Dividend Factor for each company; (iii) add together all of the companies’ Cash Dividend Factors; and (iv) divide the company’s Cash Dividend Factor by the sum of all Cash Dividend Factors. On the Index’s annual screening date, the Index caps the weight of components exposed to any one country and any one sector (except for the real estate sector) at 25%. The weight of components exposed to the real estate sector is capped at 15%. The Index also may adjust the weight of individual components on the annual screening date based on certain quantitative thresholds or limits tied to key metrics of a component security, such as its trading volume. To the extent the Index reduces an individual component’s weight, the excess weight will be reallocated pro rata among the other components. Similarly, if the Index increases a component’s weight, the weight of the other components will be reduced on a pro rata basis to contribute the weight needed for such increase. The weight of a sector, country, or individual component in the Index may fluctuate above or below specified caps and thresholds, respectively, between screening dates in response to market conditions.
WisdomTree, Inc. (“WisdomTree”), as Index provider, currently uses the Global Industry Classification Standard (GICS®), a widely recognized industry classification methodology developed by MSCI, Inc. and Standard & Poor’s Financial Services LLC, to define companies within a sector. The following sectors are included in the Index: communication services, consumer discretionary, consumer staples, energy, financials, health care, industrials, information technology, materials, real estate, and utilities. A sector is comprised of multiple industries. For example, the energy sector is comprised of companies in the energy equipment and services industry as well as the oil, gas and consumable fuels industry. As of June 30, 2023, companies in the information technology and financials sectors comprised a significant portion (i.e., in excess of 15% of the Index’s total weighting) of the Index; however, the Index's sector exposure may change from time to time.
As of June 30, 2023, the equity securities of companies domiciled in or otherwise tied to Taiwan and China comprised a significant portion (i.e., in excess of 15% of the Index’s total weighting) of the Index, although the Index’s geographic exposure may change from time to time.
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134 WisdomTree Trust Prospectus |
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■ | |
■ | |
■ | |
■ | |
■ | |
■ | |
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WisdomTree Trust Prospectus 135 |
■ | |
■ | |
■ |
Investments
in Taiwan
The economy of Taiwan is heavily dependent on exports. Currency
fluctuations, increasing competition from Asia’s other emerging economies, and
conditions that weaken demand for Taiwan’s export products worldwide could have
a negative impact on the Taiwanese economy as a whole. Concerns over Taiwan’s
history of political contention and its current relationship with China may also
have a significant impact on the economy of Taiwan.
Investments
in China
China may be subject to considerable degrees of economic,
political and social instability. The Chinese market remains a developing market
and may be subject to significantly higher volatility in comparison to those of
more developed markets. While the Chinese government has implemented economic
and market reforms, the government continues to exert substantial influence over
Chinese markets and the economy as a whole. Internal social unrest or
confrontations with neighboring countries, including military conflicts in
response to such events, may also disrupt economic development in China and
result in a greater risk of currency fluctuations, currency non-convertibility,
interest rate fluctuations and higher rates of inflation. Additionally, China is
alleged to have participated in state-sponsored cyberattacks against foreign
companies and foreign governments. Actual and threatened responses to such
activity and strained international relations, including purchasing
restrictions, sanctions, tariffs or cyberattacks on the Chinese government or
Chinese companies, may impact China’s economy and Chinese issuers of securities
in which the Fund invests. The Chinese economy may also experience slower growth
if global or domestic demand for Chinese goods decreases significantly and/or
key trading partners apply trade tariffs or implement other protectionist
measures.
■ | |
■ |
136 WisdomTree Trust Prospectus |
■ | |
■ | |
■ | |
■ | |
■ |
Year | Return |
2013 | - |
2014 | - |
2015 | - |
2016 | |
2017 | |
2018 | - |
2019 | |
2020 | |
2021 | |
2022 | - |
The Fund’s
as of was .
WisdomTree Trust Prospectus 137 |
Best and Worst Quarter Returns (for the periods reflected in the bar chart above)
Return | Quarter/Year | |
2Q/2020 | ||
1Q/2020 |
WisdomTree Emerging Markets SmallCap Dividend Fund | 1 Year | 5 Years | 10 Years |
Return Before Taxes Based on NAV | ( |
||
Return After Taxes on Distributions | ( |
( |
|
Return After Taxes on Distributions and Sale of Fund Shares | ( |
||
WisdomTree Emerging Markets SmallCap Dividend Index (Reflects no deduction for fees, expenses or taxes) | ( |
||
MSCI Emerging Markets Small Cap Index (Reflects no deduction for fees, expenses or taxes) | ( |
Management
Investment Adviser and Sub-Adviser
WisdomTree Asset Management, Inc. (“WisdomTree Asset Management” or the “Adviser”) serves as investment adviser to the Fund. Mellon Investments Corporation (the “Sub-Adviser”) serves as sub-adviser to the Fund.
Portfolio Managers
The Fund is managed by the Sub-Adviser’s Equity Index Strategies Portfolio Management team. The individual members of the team jointly and primarily responsible for the day-to-day management of the Fund’s portfolio are identified below.
Marlene Walker-Smith, a Director, Head of Equity Index Portfolio Management, has been a portfolio manager of the Fund since October 2020.
David France, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Todd Frysinger, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Vlasta Sheremeta, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Michael Stoll, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Buying and Selling Fund Shares
The Fund is an ETF. This means that individual shares of the Fund are listed on a national securities exchange, such as NYSE Arca, and may only be purchased and sold in the secondary market through a broker-dealer at market prices. Because Fund shares trade at market prices rather than NAV, shares may trade at a price greater than NAV (premium) or less than NAV (discount). In addition, an investor may incur costs attributable to the difference between the highest price a buyer is willing to pay to purchase shares (bid) and the lowest price a seller is willing to accept for shares (ask) when buying and selling shares in the secondary market (the “bid/ask spread”). Recent information regarding the Fund, including its NAV, market price, premiums and discounts, and bid/ask spreads, is available on the Fund’s website at www.wisdomtree.com/investments.
138 WisdomTree Trust Prospectus |
The Fund issues and redeems shares at NAV only in large blocks of shares (“Creation Units”), which only certain institutions or large investors (typically market makers or other broker-dealers) may purchase or redeem. The Fund issues and redeems Creation Units in exchange for a portfolio of securities and/or U.S. cash.
Tax Information
The Fund intends to make distributions that may be taxed as ordinary income, qualified dividend income, or capital gains.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank) (an “Intermediary”), WisdomTree Asset Management or its affiliates may pay Intermediaries for certain activities related to the Fund, including participation in activities that are designed to make Intermediaries more knowledgeable about exchange-traded products, including the Fund, or for other activities, such as marketing, educational training or other initiatives related to the sale or promotion of Fund shares. These payments may create a conflict of interest by influencing the Intermediary and your salesperson to recommend the Fund over another investment. Any such arrangements do not result in increased Fund expenses. Ask your salesperson or visit the Intermediary’s website for more information.
WisdomTree Trust Prospectus 139 |
The WisdomTree Emerging Markets Quality Dividend Growth Fund (the “Fund”) seeks income and capital appreciation.
The following table describes the fees and expenses you may pay if you buy, hold and sell shares of the Fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example below. The fees are expressed as a percentage of the Fund’s average net assets.
Management Fees | |
Distribution and/or Service (12b-1) Fees | |
Other Expenses | |
Total Annual Fund Operating Expenses |
The following
example is intended to help retail investors compare the cost of investing in
the Fund with the cost of investing in other funds. It illustrates the
hypothetical expenses that such investors would incur over various periods if
they were to invest $10,000 in the Fund for the time periods indicated and then
redeem all of their shares at the end of those periods. This example assumes
that the Fund provides a return of 5% a year and that operating expenses remain
the same. This example does not include the brokerage commissions that retail
investors may pay to buy and sell shares of the Fund.
1 Year | 3 Years | 5 Years | 10 Years | |
$
|
$
|
$
|
$
|
The Fund pays
transaction costs, such as commissions, when it buys and sells securities (or
“turns over” its portfolio). A higher portfolio turnover rate may indicate
higher transaction costs and may result in higher taxes when Fund shares are
held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the example, affect the Fund’s performance. During the
most recent fiscal year, the Fund’s portfolio turnover rate was
The Fund, an exchange-traded fund (“ETF”), is actively managed using a model-based approach.
The Fund may invest in large-, mid-, and small-capitalization companies in any sector. As of June 30, 2023, companies in the information technology sector comprised a significant portion (i.e., in excess of 15%) of the Fund’s assets; however, the Fund’s sector exposure may change from time to time. Currently, the Fund invests to a significant extent (i.e., in excess of 15% of the Fund’s total assets) in the equity securities of companies domiciled in or otherwise tied to, and thus, has significant investment exposure to, India and Taiwan, although the Fund’s geographic exposure may change from time to time.
140 WisdomTree Trust Prospectus |
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WisdomTree Trust Prospectus 141 |
■ | |
■ | |
■ | |
■ | |
■ |
Investments
in India
Political and economic conditions and changes in regulatory,
tax, or economic policy in India could significantly affect the market in India
and in surrounding or related countries and could have a negative impact on the
Fund. While the Indian government has implemented reforms designed to liberalize
many aspects of India's economy, there is not assurance that these policies will
be successful or continue. Indian is also subject to religious and social unrest
as well as border disputes with neighboring countries such as Pakistan and
China.
Investments
in Taiwan
The economy of Taiwan is heavily dependent on exports. Currency
fluctuations, increasing competition from Asia’s other emerging economies, and
conditions that weaken demand for Taiwan’s export products worldwide could have
a negative impact on the Taiwanese economy as a whole. Concerns over Taiwan’s
history of political contention and its current relationship with China also may
have a significant impact on the economy of Taiwan.
■ |
142 WisdomTree Trust Prospectus |
■ | |
■ | |
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■ |
The Fund’s objective changed effective October 19, 2018. Prior to October 19, 2018, Fund performance reflects the investment objective of the Fund when it tracked the performance, before fees and expenses, of the WisdomTree Emerging Markets Quality Dividend Growth Index.
WisdomTree Trust Prospectus 143 |
Year | Return |
2014 | |
2015 | - |
2016 | |
2017 | |
2018 | - |
2019 | |
2020 | |
2021 | |
2022 | - |
The Fund’s
as of was .
Best and Worst Quarter Returns (for the periods reflected in the bar chart above)
Return | Quarter/Year | |
2Q/2020 | ||
1Q/2020 |
WisdomTree Emerging Markets Quality Dividend Growth Fund* | 1 Year | 5 Years | Since
Inception |
Return Before Taxes Based on NAV | ( |
( |
|
Return After Taxes on Distributions | ( |
( |
|
Return After Taxes on Distributions and Sale of Fund Shares | ( |
( |
|
MSCI Emerging Markets Index (Reflects no deduction for fees, expenses or taxes) | ( |
( |
* |
Management
Investment Adviser and Sub-Adviser
WisdomTree Asset Management, Inc. (“WisdomTree Asset Management” or the “Adviser”) serves as investment adviser to the Fund. Mellon Investments Corporation (the “Sub-Adviser”) serves as sub-adviser to the Fund.
Portfolio Managers
The Fund is managed by the Sub-Adviser’s Equity Index Strategies Portfolio Management team. The individual members of the team jointly and primarily responsible for the day-to-day management of the Fund’s portfolio are identified below.
Marlene Walker-Smith, a Director, Head of Equity Index Portfolio Management, has been a portfolio manager of the Fund since October 2020.
David France, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Todd Frysinger, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Vlasta Sheremeta, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
144 WisdomTree Trust Prospectus |
Michael Stoll, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Buying and Selling Fund Shares
The Fund is an ETF. This means that individual shares of the Fund are listed on a national securities exchange, such as NASDAQ, and may only be purchased and sold in the secondary market through a broker-dealer at market prices. Because Fund shares trade at market prices rather than NAV, shares may trade at a price greater than NAV (premium) or less than NAV (discount). In addition, an investor may incur costs attributable to the difference between the highest price a buyer is willing to pay to purchase shares (bid) and the lowest price a seller is willing to accept for shares (ask) when buying and selling shares in the secondary market (the “bid/ask spread”). Recent information regarding the Fund, including its NAV, market price, premiums and discounts, and bid/ask spreads, is available on the Fund’s website at www.wisdomtree.com/investments.
The Fund issues and redeems shares at NAV only in large blocks of shares (“Creation Units”), which only certain institutions or large investors (typically market makers or other broker-dealers) may purchase or redeem. The Fund issues and redeems Creation Units in exchange for a portfolio of securities and/or U.S. cash.
Tax Information
The Fund intends to make distributions that may be taxed as ordinary income, qualified dividend income, or capital gains.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank) (an “Intermediary”), WisdomTree Asset Management or its affiliates may pay Intermediaries for certain activities related to the Fund, including participation in activities that are designed to make Intermediaries more knowledgeable about exchange-traded products, including the Fund, or for other activities, such as marketing, educational training or other initiatives related to the sale or promotion of Fund shares. These payments may create a conflict of interest by influencing the Intermediary and your salesperson to recommend the Fund over another investment. Any such arrangements do not result in increased Fund expenses. Ask your salesperson or visit the Intermediary’s website for more information.
WisdomTree Trust Prospectus 145 |
The WisdomTree Emerging Markets Multifactor Fund (the “Fund”) seeks capital appreciation.
The following table describes the fees and expenses you may pay if you buy, hold and sell shares of the Fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example below. The fees are expressed as a percentage of the Fund’s average net assets.
Management Fees | |
Distribution and/or Service (12b-1) Fees | |
Other Expenses | |
Total Annual Fund Operating Expenses |
The following
example is intended to help retail investors compare the cost of investing in
the Fund with the cost of investing in other funds. It illustrates the
hypothetical expenses that such investors would incur over various periods if
they were to invest $10,000 in the Fund for the time periods indicated and then
redeem all of their shares at the end of those periods. This example assumes
that the Fund provides a return of 5% a year and that operating expenses remain
the same. This example does not include the brokerage commissions that retail
investors may pay to buy and sell shares of the Fund.
1 Year | 3 Years | 5 Years | 10 Years | |
$
|
$
|
$
|
$
|
The Fund pays
transaction costs, such as commissions, when it buys and sells securities (or
“turns over” its portfolio). A higher portfolio turnover rate may indicate
higher transaction costs and may result in higher taxes when Fund shares are
held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the example, affect the Fund’s performance. During the
most recent fiscal period, the Fund’s portfolio turnover rate was
The Fund, an exchange-traded fund (“ETF”), is actively managed using a model-based approach.
The Fund seeks to achieve its investment objective by investing primarily in equity securities of emerging markets that exhibit certain characteristics that the investment adviser, WisdomTree Asset Management, Inc. (“WisdomTree”), believes to be indicative of positive future returns based on a model developed by WisdomTree. WisdomTree seeks to identify equity securities of emerging markets countries that have the highest potential for returns based on proprietary measures of fundamental factors, such as value and quality, and technical factors, such as momentum and correlation. WisdomTree employs a quantitative model to identify which securities the Fund might purchase and sell and opportune times for purchases and sales. At a minimum, the Fund’s portfolio will be rebalanced quarterly according to WisdomTree’s quantitative model, although a more active approach may be taken depending on such factors as market conditions and investment opportunities, and the number of holdings in the Fund may vary.
WisdomTree seeks to manage the Fund’s currency risk by dynamically hedging currency fluctuations in the relative value of the applicable foreign currencies against the U.S. dollar, ranging from a 0% to 100% hedge. The hedge ratios on such foreign currencies are adjusted as frequently as weekly utilizing signals such as momentum, interest rate differentials, volatility, and cross-asset returns. The Fund uses forward currency contracts and/or futures contracts to the extent foreign currencies are hedged.
146 WisdomTree Trust Prospectus |
The Fund currently uses the Global Industry Classification Standard (GICS®), a widely recognized industry classification methodology developed by MSCI, Inc. and Standard & Poor’s Financial Services LLC, to define companies within a sector. The following sectors are included in the Fund: communication services, consumer discretionary, consumer staples, energy, financials, health care, industrials, information technology, materials, real estate, and utilities. A sector is comprised of multiple industries. For example, the energy sector is comprised of companies in the energy equipment and services industry as well as the oil, gas and consumable fuels industry. As of June 30, 2023, companies in the information technology and financials sectors comprised a significant portion (i.e., in excess of 15%) of the Fund’s assets; however, the Fund’s sector exposure may change from time to time.
As of June 30, 2023, the Fund invested a significant portion (i.e., in excess of 15%) of its assets in the equity securities of companies domiciled in or otherwise tied to, and thus had significant investment exposure to, India and Taiwan, although the Fund’s geographic exposure may change from time to time.
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WisdomTree Trust Prospectus 147 |
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148 WisdomTree Trust Prospectus |
Investments
in India
Political and economic conditions and changes in regulatory,
tax, or economic policy in India could significantly affect the market in India
and in surrounding or related countries and could have a negative impact on the
Fund. While the Indian government has implemented reforms designed to liberalize
many aspects of India's economy, there is not assurance that these policies will
be successful or continue. Indian is also subject to religious and social unrest
as well as border disputes with neighboring countries such as Pakistan and
China.
Investments
in Taiwan
The economy of Taiwan is heavily dependent on exports. Currency
fluctuations, increasing competition from Asia’s other emerging economies, and
conditions that weaken demand for Taiwan’s export products worldwide could have
a negative impact on the Taiwanese economy as a whole. Concerns over Taiwan’s
history of political contention and its current relationship with China also may
have a significant impact on the economy of Taiwan.
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WisdomTree Trust Prospectus 149 |
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Year | Return |
2019 | |
2020 | |
2021 | |
2022 | - |
The Fund’s
as of was .
Best and Worst Quarter Returns (for the periods reflected in the bar chart above)
Return | Quarter/Year | |
2Q/2020 | ||
1Q/2020 |
150 WisdomTree Trust Prospectus |
WisdomTree Emerging Markets Multifactor Fund | 1 Year | Since
Inception |
Return Before Taxes Based on NAV | ( |
( |
Return After Taxes on Distributions | ( |
( |
Return After Taxes on Distributions and Sale of Fund Shares | ( |
( |
MSCI Emerging Markets Index (Reflects no deduction for fees, expenses or taxes) | ( |
( |
Management
Investment Adviser and Sub-Adviser
WisdomTree Asset Management, Inc. (“WisdomTree Asset Management” or the “Adviser”) serves as investment adviser to the Fund. Mellon Investments Corporation (the “Sub-Adviser”) serves as sub-adviser to the Fund.
Portfolio Managers
The Fund is managed by the Sub-Adviser’s Equity Index Strategies Portfolio Management team. The individual members of the team jointly and primarily responsible for the day-to-day management of the Fund’s portfolio are identified below.
Marlene Walker-Smith, a Director, Head of Equity Index Portfolio Management, has been a portfolio manager of the Fund since October 2020.
David France, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Todd Frysinger, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Vlasta Sheremeta, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Michael Stoll, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Buying and Selling Fund Shares
The Fund is an ETF. This means that individual shares of the Fund are listed on a national securities exchange, such as NYSE Arca, and may only be purchased and sold in the secondary market through a broker-dealer at market prices. Because Fund shares trade at market prices rather than NAV, shares may trade at a price greater than NAV (premium) or less than NAV (discount). In addition, an investor may incur costs attributable to the difference between the highest price a buyer is willing to pay to purchase shares (bid) and the lowest price a seller is willing to accept for shares (ask) when buying and selling shares in the secondary market (the “bid/ask spread”). Recent information regarding the Fund, including its NAV, market price, premiums and discounts, and bid/ask spreads, is available on the Fund’s website at www.wisdomtree.com/investments.
The Fund issues and redeems shares at NAV only in large blocks of shares (“Creation Units”), which only certain institutions or large investors (typically market makers or other broker-dealers) may purchase or redeem. The Fund issues and redeems Creation Units in exchange for a portfolio of securities and/or U.S. cash.
Tax Information
The Fund intends to make distributions that may be taxed as ordinary income, qualified dividend income, or capital gains.
WisdomTree Trust Prospectus 151 |
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank) (an “Intermediary”), WisdomTree Asset Management or its affiliates may pay Intermediaries for certain activities related to the Fund, including participation in activities that are designed to make Intermediaries more knowledgeable about exchange-traded products, including the Fund, or for other activities, such as marketing, educational training or other initiatives related to the sale or promotion of Fund shares. These payments may create a conflict of interest by influencing the Intermediary and your salesperson to recommend the Fund over another investment. Any such arrangements do not result in increased Fund expenses. Ask your salesperson or visit the Intermediary’s website for more information.
152 WisdomTree Trust Prospectus |
The WisdomTree Emerging Markets ex-State-Owned Enterprises Fund (the “Fund”) seeks to track the price and yield performance, before fees and expenses, of the WisdomTree Emerging Markets ex-State-Owned Enterprises Index (the “Index”).
The following table describes the fees and expenses you may pay if you buy, hold and sell shares of the Fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example below. The fees are expressed as a percentage of the Fund’s average net assets.
Management Fees | |
Distribution and/or Service (12b-1) Fees | |
Other Expenses | |
Total Annual Fund Operating Expenses |
The following
example is intended to help retail investors compare the cost of investing in
the Fund with the cost of investing in other funds. It illustrates the
hypothetical expenses that such investors would incur over various periods if
they were to invest $10,000 in the Fund for the time periods indicated and then
redeem all of their shares at the end of those periods. This example assumes
that the Fund provides a return of 5% a year and that operating expenses remain
the same. This example does not include the brokerage commissions that retail
investors may pay to buy and sell shares of the Fund.
1 Year | 3 Years | 5 Years | 10 Years | |
$
|
$
|
$
|
$
|
The Fund pays
transaction costs, such as commissions, when it buys and sells securities (or
“turns over” its portfolio). A higher portfolio turnover rate may indicate
higher transaction costs and may result in higher taxes when Fund shares are
held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the example, affect the Fund’s performance. During the
most recent fiscal year, the Fund’s portfolio turnover rate was
The Fund employs a “passive management” – or indexing – investment approach designed to track the performance of the Index. The Fund generally uses a representative sampling strategy to achieve its investment objective, meaning it generally will invest in a sample of the securities in the Index whose risk, return and other characteristics resemble the risk, return, and other characteristics of the Index as a whole. Under normal circumstances, at least 80% of the Fund’s total assets (exclusive of collateral held from securities lending) will be invested in component securities of the Index and investments that have economic characteristics that are substantially identical to the economic characteristics of such component securities.
The Index is a modified float-adjusted market cap weighted index that consists of common stocks in emerging markets, excluding common stocks of “state-owned enterprises.” WisdomTree, Inc. (“WisdomTree”), as Index provider, defines state-owned enterprises as companies with over 20% government ownership. The starting universe for the Index (the “pre-screening universe”) includes companies that: (i) are incorporated or domiciled (i.e., maintain their principal place of business) in one of the following emerging market countries: Argentina, Brazil, Chile, China, Czech Republic, Hungary, India, Indonesia, Korea, Malaysia, Mexico, the Philippines, Poland, Russia, Saudi Arabia, South Africa, Taiwan, Thailand, or Turkey; (ii) list shares on a stock exchange in one of the foregoing emerging market countries or the United States (except Chinese companies may have shares listed in Hong Kong); (iii) have a float-adjusted market capitalization of at least $1 billion as of the Index screening date (“float-adjusted” means that the share amounts reflect only shares available to investors); (iv) have a median daily dollar trading volume of at least $100,000 for the three months preceding the Index screening date; and (v) trade at least 250,000 shares per month or $25 million notional for each of the six months preceding the Index screening date. The Index is comprised of the companies in the pre-screening universe that are not state-owned enterprises as of the annual Index screening date.
WisdomTree Trust Prospectus 153 |
Securities are weighted in the Index based on a modified market cap weighting scheme that adjusts the weight of Index securities from each country to approximate the weight of securities from that country in the pre-screening universe (excluding any domestic listed Chinese securities). The weight of Index securities from a single country, however, will not be multiplied by a factor greater than three. After applying the foregoing country weight adjustment, should any sector have a weight that is 3% higher or lower than its pre-screening universe sector weight, such sector’s weight will be adjusted by a factor so that the sector’s weight is 3% higher or lower, respectively, than its pre-screening universe weight. Companies that are not state-owned, but are incorporated within countries that have relatively high government ownership among initial screening constituents, could potentially see higher weights than they would under a normal market cap weighting scheme. Companies that are not state-owned, but are incorporated within countries that have relatively low government ownership among initial screening constituents, could potentially see lower weights than they would under a normal market cap weighting scheme. The Index also may adjust the weight of individual components on the annual screening date based on certain quantitative thresholds or limits tied to key metrics of a component security, such as its market capitalization and trading volume. To the extent the Index reduces an individual component’s weight, the excess weight will be reallocated pro rata among the other components. Similarly, if the Index increases a component’s weight, the weight of the other components will be reduced on a pro rata basis to contribute the weight needed for such increase. The weight of a sector or individual component in the Index may fluctuate above or below specified caps and thresholds, respectively, between screening dates in response to market conditions.
WisdomTree, Inc. (“WisdomTree”), as Index provider, currently uses the Global Industry Classification Standard (GICS®), a widely recognized industry classification methodology developed by MSCI, Inc. and Standard & Poor’s Financial Services LLC, to define companies within a sector. The following sectors are included in the Index: communication services, consumer discretionary, consumer staples, energy, financials, health care, industrials, information technology, materials, real estate, and utilities. A sector is comprised of multiple industries. For example, the energy sector is comprised of companies in the energy equipment and services industry as well as the oil, gas and consumable fuels industry. As of June 30, 2023, companies in the information technology, consumer discretionary, and financials sectors comprised a significant portion (i.e., in excess of 15% of the Index’s total weighting) of the Index; however, the Index's sector exposure may change from time to time.
As of June 30, 2023, the equity securities of companies domiciled in or otherwise tied to China, India and Taiwan comprised a significant portion (i.e., in excess of 15% of the Index’s total weighting) of the Index, although the Index’s geographic exposure may change from time to time.
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154 WisdomTree Trust Prospectus |
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WisdomTree Trust Prospectus 155 |
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Investments
in China
Although the Chinese economy has grown rapidly during recent
years and the Chinese government has implemented significant economic reforms to
liberalize trade policy, promote foreign investment, and reduce government
control of the economy, there can be no guarantee that economic growth or these
reforms will continue. The Chinese economy may also experience a decline in its
growth rate if global or domestic demand for Chinese goods decreases
significantly and/or key trading partners apply trade tariffs or implement other
protectionist measures, including measures implemented in connection with
ongoing tensions between China and the United States. The Chinese economy is
susceptible to rising rates of inflation, economic recession, market
inefficiency, volatility, and pricing anomalies that may be connected to
governmental influence, a lack of publicly-available information and/or
political and social instability. The government of China maintains strict
currency controls in order to achieve economic, trade and political objectives
and regularly intervenes in the currency market. The Chinese government also
plays a major role in the country’s economic policies regarding foreign
investments. Foreign investors are subject to the risk of loss from
expropriation or nationalization of their investment assets and property and
governmental restrictions on foreign investments and the repatriation of capital
invested. These risks may be exacerbated by actions by the U.S. government, such
as the recent delisting from U.S. national securities exchanges of certain
Chinese companies. The Chinese government also may intervene or seek to control
the operations, structure, or ownership of Chinese companies, including with
respect to foreign investors of such companies. For example, the Fund may invest
to a significant extent in variable interest entity (“VIE”) structures. VIE
structures can vary, but generally consist of a U.S.-listed company with
contractual arrangements, through one or more wholly-owned special purpose
vehicles, with a Chinese company that ultimately provides the U.S.-listed
company with contractual rights to exercise control over and obtain economic
benefits from the Chinese company. The VIE structure enables foreign investors,
such as the Fund, to obtain investment exposure similar to that of an equity
owner in a Chinese company in situations in which the Chinese government has
restricted or prohibited the ownership of such company by foreign investors. As
a result, an investment in a VIE structure subjects the Fund to the risks
associated with the underlying Chinese company. Intervention by the Chinese
government into the operation or ownership of VIE structures could significantly
and adversely affect the Chinese company’s performance and thus, the value of
the Fund’s investment in the VIE, as well as the enforceability of the VIE
contractual arrangements with the underlying Chinese company. In the event of
such an occurrence, the Fund, as a foreign investor, may have little or no legal
recourse. The Fund’s investment in a VIE structure is also subject to the risk
that the underlying Chinese company (or its officers, directors, or Chinese
equity owners) may breach its contractual arrangements with the other entities
in the VIE structure, or Chinese law changes in a way that adversely affects the
enforceability of these arrangements, or those contracts are otherwise not
enforceable under Chinese law, in which case the Fund may suffer significant
losses on its VIE investments with little or no recourse available. The
regulatory requirements applicable to Chinese companies, including accounting
standards and auditor oversight, generally are not comparable to those
applicable to U.S. companies or companies organized and operating in more
developed countries. As a result, information about the Chinese companies in
which the Fund invests may be less reliable or incomplete. The lack of available
information may be a significant obstacle to pursuing investigations into or
litigation against Chinese companies, and as a shareholder, the Fund may have
limited legal remedies. The Chinese securities markets are subject to more
frequent trading halts and low trading volume, resulting in substantially less
liquidity and greater price volatility. These and other factors could have a
negative impact on the Fund’s performance and increase the volatility of an
investment in the Fund.
156 WisdomTree Trust Prospectus |
Investments
in India
Political and economic conditions and changes in regulatory,
tax, or economic policy in India could significantly affect the market in India
and in surrounding or related countries and could have a negative impact on the
Fund. While the Indian government has implemented reforms designed to liberalize
many aspects of India's economy, there is not assurance that these policies will
be successful or continue. Indian is also subject to religious and social unrest
as well as border disputes with neighboring countries such as Pakistan and
China.
Investments
in Taiwan
The economy of Taiwan is heavily dependent on exports. Currency
fluctuations, increasing competition from Asia’s other emerging economies, and
conditions that weaken demand for Taiwan’s export products worldwide could have
a negative impact on the Taiwanese economy as a whole. Concerns over Taiwan’s
history of political contention and its current relationship with China may also
have a significant impact on the economy of Taiwan.
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WisdomTree Trust Prospectus 157 |
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Year | Return |
2015 | - |
2016 | |
2017 | |
2018 | - |
2019 | |
2020 | |
2021 | - |
2022 | - |
The Fund’s
as of was .
Best and Worst Quarter Returns (for the periods reflected in the bar chart above)
Return | Quarter/Year | |
2Q/2020 | ||
1Q/2020 |
158 WisdomTree Trust Prospectus |
WisdomTree Emerging Markets ex-State-Owned Enterprises Fund | 1 Year | 5 Years | Since
Inception |
Return Before Taxes Based on NAV | ( |
( |
|
Return After Taxes on Distributions | ( |
( |
|
Return After Taxes on Distributions and Sale of Fund Shares | ( |
( |
|
WisdomTree Emerging Markets ex-State-Owned Enterprises Index (Reflects no deduction for fees, expenses or taxes) | ( |
( |
|
MSCI Emerging Markets Index (Reflects no deduction for fees, expenses or taxes) | ( |
( |
Management
Investment Adviser and Sub-Adviser
WisdomTree Asset Management, Inc. (“WisdomTree Asset Management” or the “Adviser”) serves as investment adviser to the Fund. Mellon Investments Corporation (the “Sub-Adviser”) serves as sub-adviser to the Fund.
Portfolio Managers
The Fund is managed by the Sub-Adviser’s Equity Index Strategies Portfolio Management team. The individual members of the team jointly and primarily responsible for the day-to-day management of the Fund’s portfolio are identified below.
Marlene Walker-Smith, a Director, Head of Equity Index Portfolio Management, has been a portfolio manager of the Fund since October 2020.
David France, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Todd Frysinger, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Vlasta Sheremeta, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Michael Stoll, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Buying and Selling Fund Shares
The Fund is an ETF. This means that individual shares of the Fund are listed on a national securities exchange, such as NYSE Arca, and may only be purchased and sold in the secondary market through a broker-dealer at market prices. Because Fund shares trade at market prices rather than NAV, shares may trade at a price greater than NAV (premium) or less than NAV (discount). In addition, an investor may incur costs attributable to the difference between the highest price a buyer is willing to pay to purchase shares (bid) and the lowest price a seller is willing to accept for shares (ask) when buying and selling shares in the secondary market (the “bid/ask spread”). Recent information regarding the Fund, including its NAV, market price, premiums and discounts, and bid/ask spreads, is available on the Fund’s website at www.wisdomtree.com/investments.
The Fund issues and redeems shares at NAV only in large blocks of shares (“Creation Units”), which only certain institutions or large investors (typically market makers or other broker-dealers) may purchase or redeem. The Fund issues and redeems Creation Units in exchange for a portfolio of securities and/or U.S. cash.
Tax Information
The Fund intends to make distributions that may be taxed as ordinary income, qualified dividend income, or capital gains.
WisdomTree Trust Prospectus 159 |
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank) (an “Intermediary”), WisdomTree Asset Management or its affiliates may pay Intermediaries for certain activities related to the Fund, including participation in activities that are designed to make Intermediaries more knowledgeable about exchange-traded products, including the Fund, or for other activities, such as marketing, educational training or other initiatives related to the sale or promotion of Fund shares. These payments may create a conflict of interest by influencing the Intermediary and your salesperson to recommend the Fund over another investment. Any such arrangements do not result in increased Fund expenses. Ask your salesperson or visit the Intermediary’s website for more information.
160 WisdomTree Trust Prospectus |
The WisdomTree India Earnings Fund (the “Fund”) seeks to track the price and yield performance, before fees and expenses, of the WisdomTree India Earnings Index (the “Index”).
The following table describes the fees and expenses you may pay if you buy, hold and sell shares of the Fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example below. The fees are expressed as a percentage of the Fund’s average net assets.
Management Fees | |
Distribution and/or Service (12b-1) Fees | |
Other Expenses | |
Total Annual Fund Operating Expenses |
1 |
The following
example is intended to help retail investors compare the cost of investing in
the Fund with the cost of investing in other funds. It illustrates the
hypothetical expenses that such investors would incur over various periods if
they were to invest $10,000 in the Fund for the time periods indicated and then
redeem all of their shares at the end of those periods. This example assumes
that the Fund provides a return of 5% a year and that operating expenses remain
the same. This example does not include the brokerage commissions that retail
investors may pay to buy and sell shares of the Fund.
1 Year | 3 Years | 5 Years | 10 Years | |
$
|
$
|
$
|
$
|
The Fund pays
transaction costs, such as commissions, when it buys and sells securities (or
“turns over” its portfolio). A higher portfolio turnover rate may indicate
higher transaction costs and may result in higher taxes when Fund shares are
held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the example, affect the Fund’s performance. During the
most recent fiscal year, the Fund’s portfolio turnover rate was
The Fund employs a “passive management” – or indexing – investment approach designed to track the performance of the Index. The Fund generally uses a representative sampling strategy to achieve its investment objective, meaning it generally will invest in a sample of the securities in the Index whose risk, return and other characteristics resemble the risk, return and other characteristics of the Index as a whole. Under normal circumstances, at least 95% of the Fund’s total assets (exclusive of collateral held from securities lending) will be invested in component securities of the Index and investments that have economic characteristics that are substantially identical to the economic characteristics of such component securities.
The Index is a fundamentally weighted index that is comprised of companies incorporated and traded in India that are profitable and that are eligible to be purchased by foreign investors as of the annual Index screening date. To be eligible for inclusion in the Index, a company must meet the following criteria as of the annual Index screening date: (i) incorporation within India; (ii) listing on a major Indian stock exchange; (iii) earnings of at least $5 million during the preceding fiscal year; (iv) market capitalization of at least $200 million; (v) trading of at least 250,000 shares per month for each of the preceding six months; (vi) median daily dollar trading volume of at least $200,000 for each of the preceding six months; and (vii) price to earnings ratio of at least 2.
WisdomTree Trust Prospectus 161 |
The initial weight of a component in the Index at the annual screening date is based on reported net income in the most recent fiscal year prior to the annual Index screening date. The reported net income number is then multiplied by a second factor developed by Standard & Poor’s called the “Investability Weighting Factor” (“IWF”). The IWF is used to scale the earnings generated by each company by restrictions on shares available to be purchased. The product of the reported net income and IWF is known at the “Earnings Factor.” Companies are weighted by the proportion of each individual earnings factor relative to the sum of all earnings factors within the WisdomTree India Earnings Index. On the Index’s annual screening date, the Index caps the weight of components exposed to any one sector at 25%. The Index also may adjust the weight of individual components on the annual screening date based on certain quantitative thresholds or limits tied to key metrics of a component security, such as its trading volume. To the extent the Index reduces an individual component’s weight, the excess weight will be reallocated pro rata among the other components. Similarly, if the Index increases a component’s weight, the weight of the other components will be reduced on a pro rata basis to contribute the weight needed for such increase. The weight of a sector or individual component in the Index may fluctuate above or below specified caps and thresholds, respectively, between screening dates in response to market conditions.
WisdomTree, Inc. (“WisdomTree”), as Index provider, currently uses the Global Industry Classification Standard (GICS®), a widely recognized industry classification methodology developed by MSCI, Inc. and Standard & Poor’s Financial Services LLC, to define companies within a sector. The following sectors are included in the Index: communication services, consumer discretionary, consumer staples, energy, financials, health care, industrials, information technology, materials, real estate, and utilities. A sector is comprised of multiple industries. For example, the energy sector is comprised of companies in the energy equipment and services industry as well as the oil, gas and consumable fuels industry. As of June 30, 2023, companies in the materials, energy and financials sectors comprised a significant portion (i.e., in excess of 15% of the Index’s total weighting) of the Index; however, the Index's sector exposure may change from time to time.
The Fund seeks to gain exposure to Indian equity securities, in whole or in part, through investments in a subsidiary organized in the Republic of Mauritius, the WisdomTree India Investment Portfolio, Inc. (the “WisdomTree Subsidiary”). The WisdomTree Subsidiary is wholly-owned and controlled by the Fund. Except as noted, references to the investment strategies and risks of the Fund include the investment strategies and risks of the WisdomTree Subsidiary.
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162 WisdomTree Trust Prospectus |
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WisdomTree Trust Prospectus 163 |
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164 WisdomTree Trust Prospectus |
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Year | Return |
2013 | - |
2014 | |
2015 | - |
2016 | |
2017 | |
2018 | - |
2019 | |
2020 | |
2021 | |
2022 | - |
The Fund’s
as of was .
WisdomTree Trust Prospectus 165 |
Best and Worst Quarter Returns (for the periods reflected in the bar chart above)
Return | Quarter/Year | |
4Q/2020 | ||
1Q/2020 |
WisdomTree India Earnings Fund | 1 Year | 5 Years | 10 Years |
Return Before Taxes Based on NAV | ( |
||
Return After Taxes on Distributions | ( |
||
Return After Taxes on Distributions and Sale of Fund Shares | ( |
||
WisdomTree India Earnings Index (Reflects no deduction for fees, expenses or taxes) | ( |
||
MSCI India Index (Reflects no deduction for fees, expenses or taxes) | ( |
Management
Investment Adviser and Sub-Adviser
WisdomTree Asset Management, Inc. (“WisdomTree Asset Management” or the “Adviser”) serves as investment adviser to the Fund. Mellon Investments Corporation (the “Sub-Adviser”) serves as sub-adviser to the Fund.
Portfolio Managers
The Fund is managed by the Sub-Adviser’s Equity Index Strategies Portfolio Management team. The individual members of the team jointly and primarily responsible for the day-to-day management of the Fund’s portfolio are identified below.
Marlene Walker-Smith, a Director, Head of Equity Index Portfolio Management, has been a portfolio manager of the Fund since October 2020.
David France, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Todd Frysinger, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Vlasta Sheremeta, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Michael Stoll, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Buying and Selling Fund Shares
The Fund is an ETF. This means that individual shares of the Fund are listed on a national securities exchange, such as NYSE Arca, and may only be purchased and sold in the secondary market through a broker-dealer at market prices. Because Fund shares trade at market prices rather than NAV, shares may trade at a price greater than NAV (premium) or less than NAV (discount). In addition, an investor may incur costs attributable to the difference between the highest price a buyer is willing to pay to purchase shares (bid) and the lowest price a seller is willing to accept for shares (ask) when buying and selling shares in the secondary market (the “bid/ask spread”). Recent information regarding the Fund, including its NAV, market price, premiums and discounts, and bid/ask spreads, is available on the Fund’s website at www.wisdomtree.com/investments.
166 WisdomTree Trust Prospectus |
The Fund issues and redeems shares at NAV only in large blocks of shares (“Creation Units”), which only certain institutions or large investors (typically market makers or other broker-dealers) may purchase or redeem. The Fund issues and redeems Creation Units solely in exchange for U.S. cash.
Tax Information
The Fund intends to make distributions that may be taxed as ordinary income, qualified dividend income, or capital gains.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank) (an “Intermediary”), WisdomTree Asset Management or its affiliates may pay Intermediaries for certain activities related to the Fund, including participation in activities that are designed to make Intermediaries more knowledgeable about exchange-traded products, including the Fund, or for other activities, such as marketing, educational training or other initiatives related to the sale or promotion of Fund shares. These payments may create a conflict of interest by influencing the Intermediary and your salesperson to recommend the Fund over another investment. Any such arrangements do not result in increased Fund expenses. Ask your salesperson or visit the Intermediary’s website for more information.
WisdomTree Trust Prospectus 167 |
The WisdomTree China ex-State-Owned Enterprises Fund (the “Fund”) seeks to track the price and yield performance, before fees and expenses, of the WisdomTree China ex-State-Owned Enterprises Index (the “Index”).
The following table describes the fees and expenses you may pay if you buy, hold and sell shares of the Fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example below. The fees are expressed as a percentage of the Fund’s average net assets.
Management Fees | |
Distribution and/or Service (12b-1) Fees | |
Other Expenses | |
Total Annual Fund Operating Expenses |
The following
example is intended to help retail investors compare the cost of investing in
the Fund with the cost of investing in other funds. It illustrates the
hypothetical expenses that such investors would incur over various periods if
they were to invest $10,000 in the Fund for the time periods indicated and then
redeem all of their shares at the end of those periods. This example assumes
that the Fund provides a return of 5% a year and that operating expenses remain
the same. This example does not include the brokerage commissions that retail
investors may pay to buy and sell shares of the Fund.
1 Year | 3 Years | 5 Years | 10 Years | |
$
|
$
|
$
|
$
|
The Fund pays
transaction costs, such as commissions, when it buys and sells securities (or
“turns over” its portfolio). A higher portfolio turnover rate may indicate
higher transaction costs and may result in higher taxes when Fund shares are
held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the example, affect the Fund’s performance. During the
most recent fiscal year, the Fund’s portfolio turnover rate was
The Fund employs a “passive management” – or indexing – investment approach designed to track the performance of the Index. The Fund generally uses a representative sampling strategy to achieve its investment objective, meaning it generally will invest in a sample of the securities in the Index whose risk, return and other characteristics resemble the risk, return and other characteristics of the Index as a whole. Under normal circumstances, at least 80% of the Fund’s total assets (exclusive of collateral held from securities lending) will be invested in component securities of the Index and investments that have economic characteristics that are substantially identical to the economic characteristics of such component securities.
The Index is a modified float-adjusted market cap weighted index that consists of common stocks in China, excluding common stocks of “state-owned enterprises.” WisdomTree, Inc. (“WisdomTree”), as index provider, defines state-owned enterprises as companies with over 20% government ownership. The Index consists of companies that: (i) are incorporated or domiciled (i.e., maintain their principal place of business) in China; (ii) list shares on a stock exchange in Hong Kong or the United States; (iii) have a float-adjusted market capitalization of at least $1 billion as of the annual Index screening date (“float-adjusted” means that the share amounts reflect only shares available to investors); (iv) have a median daily dollar trading volume of at least $100,000 for the three months preceding the annual Index screening date; (v) trade at least 250,000 shares per month or $25 million notional for each of the six months preceding the annual Index screening date; and (vi) are not state-owned enterprises as of the annual Index screening date.
168 WisdomTree Trust Prospectus |
The Index also consists of the 100 largest companies by float-adjusted market capitalization that are incorporated in mainland China, listed and traded on the Shanghai Stock Exchange (“SSE”) or Shenzhen Stock Exchange (“SZSE”) via the Shanghai-Hong Kong or Shenzhen-Hong Kong Stock Connect (“Stock Connect”) programs in Chinese renminbi (“A-Shares”) and meet the trading requirements set forth above. Stock Connect is a securities trading and clearing linked program between either SSE or SZSE, and the Stock Exchange of Hong Kong Limited (“SEHK”), Hong Kong Securities Clearing Company Limited (“HKSCC”), and China Securities Depository and Clearing Corporation Limited (“ChinaClear”), with an aim to achieve mutual stock market access between the People’s Republic of China (“PRC”) and Hong Kong. The maximum weight of China A-Shares in the Index, at the time of the Index’s annual screening date, is capped at 33%; however, the weight of China A-Shares in the Index may fluctuate above the cap in response to market conditions and/or the application of volume factor adjustments, as described below.
Securities are weighted in the Index based on float-adjusted market capitalization, as modified pursuant to certain limitations set forth below. On the Index’s annual screening date, the maximum weight of any security in the Index is capped at 10%, and the Index caps the weight of components exposed to any one sector at 30%. The Index also may adjust the weight of individual components on the annual screening date based on certain quantitative thresholds or limits tied to key metrics of a component security, such as its trading volume. To the extent the Index reduces an individual component’s weight, the excess weight will be reallocated pro rata among the other components. Similarly, if the Index increases a component’s weight, the weight of the other components will be reduced on a pro rata basis to contribute the weight needed for such increase. The weight of a sector or individual component in the Index may fluctuate above or below specified caps and thresholds, respectively, between screening dates in response to market conditions.
WisdomTree, Inc. (“WisdomTree”), as Index provider, currently uses the Global Industry Classification Standard (GICS®), a widely recognized industry classification methodology developed by MSCI, Inc. and Standard & Poor’s Financial Services LLC, to define companies within a sector. The following sectors are included in the Index: communication services, consumer discretionary, consumer staples, energy, financials, health care, industrials, information technology, materials, real estate, and utilities. A sector is comprised of multiple industries. For example, the energy sector is comprised of companies in the energy equipment and services industry as well as the oil, gas and consumable fuels industry. As of March 15, 2024, companies in the communication services and consumer discretionary sectors comprised a significant portion (i.e., in excess of 15% of the Index’s total weighting) of the Index; however, the Index's sector exposure may change from time to time.
WisdomTree Trust Prospectus 169 |
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■ | |
■ | |
■ |
170 WisdomTree Trust Prospectus |
■ | |
■ | |
■ | |
■ | |
■ | |
■ | |
■ |
WisdomTree Trust Prospectus 171 |
■ | |
■ | |
■ | |
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■ |
172 WisdomTree Trust Prospectus |
■ | |
■ |
The Fund’s name and objective changed effective July 1, 2015. Fund performance prior to July 1, 2015 reflects the investment objective and style of the Fund when it was the WisdomTree China Dividend ex-Financials Fund, and tracked the performance of the WisdomTree China Dividend ex-Financials Index.
Year | Return |
2013 | - |
2014 | |
2015 | - |
2016 | - |
2017 | |
2018 | - |
2019 | |
2020 | |
2021 | - |
2022 |
The Fund’s
as of was .
Best and Worst Quarter Returns (for the periods reflected in the bar chart above)
Return | Quarter/Year | |
1Q/2019 | ||
3Q/2022 |
WisdomTree Trust Prospectus 173 |
WisdomTree China ex-State-Owned Enterprises Fund* | 1 Year | 5 Years | 10 Years |
Return Before Taxes Based on NAV | ( |
( |
|
Return After Taxes on Distributions | ( |
( |
|
Return After Taxes on Distributions and Sale of Fund Shares | ( |
( |
|
WisdomTree China Dividend ex-Financials/China ex-State-Owned Enterprises Spliced Index** (Reflects no deduction for fees, expenses or taxes) | ( |
( |
|
MSCI China Index (Reflects no deduction for fees, expenses or taxes) | ( |
( |
|
FTSE China 50 Index*** (Reflects no deduction for fees, expenses or taxes) | ( |
( |
( |
* | |
** | |
*** |
Management
Investment Adviser and Sub-Adviser
WisdomTree Asset Management, Inc. (“WisdomTree Asset Management” or the “Adviser”) serves as investment adviser to the Fund. Mellon Investments Corporation (the “Sub-Adviser”) serves as sub-adviser to the Fund.
Portfolio Managers
The Fund is managed by the Sub-Adviser’s Equity Index Strategies Portfolio Management team. The individual members of the team jointly and primarily responsible for the day-to-day management of the Fund’s portfolio are identified below.
Marlene Walker-Smith, a Director, Head of Equity Index Portfolio Management, has been a portfolio manager of the Fund since October 2020.
David France, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Todd Frysinger, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Vlasta Sheremeta, CFA, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Michael Stoll, a Vice President, Senior Portfolio Manager and Team Manager, has been a portfolio manager of the Fund since June 2021.
Buying and Selling Fund Shares
The Fund is an ETF. This means that individual shares of the Fund are listed on a national securities exchange, such as NASDAQ, and may only be purchased and sold in the secondary market through a broker-dealer at market prices. Because Fund shares trade at market prices rather than NAV, shares may trade at a price greater than NAV (premium) or less than NAV (discount). In addition, an investor may incur costs attributable to the difference between the highest price a buyer is willing to pay to purchase shares (bid) and the lowest price a seller is willing to accept for shares (ask) when buying and selling shares in the secondary market (the “bid/ask spread”). Recent information regarding the Fund, including its NAV, market price, premiums and discounts, and bid/ask spreads, is available on the Fund’s website at www.wisdomtree.com/investments.
The Fund issues and redeems shares at NAV only in large blocks of shares (“Creation Units”), which only certain institutions or large investors (typically market makers or other broker-dealers) may purchase or redeem. The Fund issues and redeems Creation Units in exchange for a portfolio of securities and/or U.S. cash.
Tax Information
The Fund intends to make distributions that may be taxed as ordinary income, qualified dividend income, or capital gains.
174 WisdomTree Trust Prospectus |
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank) (an “Intermediary”), WisdomTree Asset Management or its affiliates may pay Intermediaries for certain activities related to the Fund, including participation in activities that are designed to make Intermediaries more knowledgeable about exchange-traded products, including the Fund, or for other activities, such as marketing, educational training or other initiatives related to the sale or promotion of Fund shares. These payments may create a conflict of interest by influencing the Intermediary and your salesperson to recommend the Fund over another investment. Any such arrangements do not result in increased Fund expenses. Ask your salesperson or visit the Intermediary’s website for more information.
WisdomTree Trust Prospectus 175 |
Additional Information About the Funds
Additional Information About the Funds’ Investment Objectives
Each Fund, except the International AI Enhanced Value Fund, International Multifactor Fund, Emerging Markets Multifactor Fund and Emerging Markets Quality Dividend Growth Fund (collectively, the “Active Funds”), seeks to track the price and yield performance, before fees and expenses, of a particular index (an “Index”) (collectively, the “Index Funds”). Each Index, except for the CenterSquare New Economy Real Estate Index, was developed by WisdomTree, Inc. (“WisdomTree”), the parent company of WisdomTree Asset Management, Inc. (“WisdomTree Asset Management” or the “Adviser”). Each WisdomTree Index consists of securities in the market suggested by its name that meet specific criteria developed by WisdomTree. CenterSquare Investment Management LLC (“CenterSquare”) is the index provider for the CenterSquare New Economy Real Estate Index, the underlying index of the New Economy Real Estate Fund.
Each Fund’s investment objective may be changed without a vote of shareholders upon 60 days’ written notice to shareholders.
Additional Information About the Funds’ Investment Strategies
Index Funds. Each Index Fund will normally invest at least 80% of its net assets, plus the amount of any borrowings for investment purposes, in the types of securities suggested by its name (i.e., investments connoted by its Index), as applicable. Each Index Fund anticipates meeting this policy because, under normal circumstances, at least 95% (80% for Europe Quality Dividend Growth Fund, Emerging Markets ex-State-Owned Enterprises Fund, China ex-State-Owned Enterprises Fund, Japan Hedged SmallCap Equity Fund, Europe Hedged SmallCap Equity Fund, New Economy Real Estate Fund, International Quality Dividend Growth Fund, and International Hedged Quality Dividend Growth Fund.) of each Index Fund’s total assets (exclusive of collateral held from securities lending) will be invested in component securities of its underlying Index and investments that have economic characteristics that are substantially identical to the economic characteristics of such component securities, such as depositary receipts based on component securities. The Adviser expects that, over time, the correlation between each Index Fund’s performance and that of its Index, before fees and expenses, will be 95% or better. A number of factors may affect an Index Fund’s ability to achieve a high degree of correlation with its Index, and there can be no guarantee that an Index Fund will achieve a high degree of correlation.
Index Funds designated as “International” generally invest in developed markets outside the United States. Index Funds designated as “Global” generally invest in developed and emerging markets throughout the world, including the United States and other regions.
The quantity of holdings in an Index Fund, by using a representative sampling strategy, will be based on a number of factors, including asset size of the Index Fund. In addition, from time to time, securities are added to or removed from an Index and consequently the attributes of an Index, such as sectors, industries or countries represented in an Index and weightings, may change. The Index Fund may sell securities that are represented in an Index, or purchase securities that are not yet represented in an Index, in anticipation of their removal from or addition to an Index or to reflect various corporate actions or other changes to an Index. Further, the Index Fund may overweight or underweight securities in an Index, purchase or sell securities not in the Index, or utilize various combinations of other available techniques, in seeking to track an Index.
International AI Enhanced Value Fund. The Fund invests in equity securities that exhibit value characteristics. Equities that exhibit value characteristics typically have a lower price-to-book ratio, which measures the value of a company’s assets relative to its stock price; a lower price-to-earnings ratio, which measures a company’s earnings relative to its stock price; and greater free cash flow, which is the cash generated from a company’s revenue or operations after the costs of expenditures have been subtracted.
International Multifactor Fund. The Fund will normally invest at least 80% of its net assets, plus the amount of any borrowings, in non-U.S. equity securities. The Adviser considers non-U.S. securities to include investments that are tied economically to a particular country or region outside the United States. The Adviser considers one or more of the following factors to determine whether an investment is tied economically to a particular country or region: the source of government guarantees (if any); the primary trading market; the issuer’s domicile, country of incorporation, sources of revenue, and location of assets; whether the investment is included in an index representative of a particular country or region; and whether the investment is exposed to the economic fortunes and risks of a particular country or region.
176 WisdomTree Trust Prospectus |
Emerging Markets Multifactor Fund and Emerging Markets Quality Dividend Growth Fund (the “Emerging Market Active Funds”). Each Emerging Market Active Fund will normally invest at least 80% of its net assets, plus the amount of any borrowings for investment purposes, in the types of securities suggested by its name. To be eligible for inclusion in the model for each Emerging Market Active Fund, a company must be either domiciled, incorporated, listed or have a high level of risk associated with at least one of the following 18 emerging market nations (Brazil, Chile, China, Czech Republic, Hungary, India, Indonesia, Korea, Malaysia, Mexico, the Philippines, Poland, Russia, Saudi Arabia, South Africa, Taiwan, Thailand, and Turkey) (with respect to China, the model may incorporate American Depository Receipts (“ADRs”) or Global Depository Receipts (“GDRs”) and locally listed shares)(with respect to Russia, the Fund will own United States and London listed ADRs and GDRs).
Hedged Equity Funds. Each Hedged Equity Fund employs strategies to “hedge” against fluctuations in the relative value of non-U.S. currencies included in its underlying Index against the U.S. dollar. For U.S. investors, international equity investments include two components of return. The first is the return attributable to stock prices in the non-U.S. market or markets in which an investment is made. The second is the return attributable to the value of non-U.S. currencies in these markets relative to the U.S. dollar. Each of these WisdomTree Hedged Equity Indices seeks to track the performance of equity securities in a developed market that is attributable solely to stock prices.
Indexes. Each Index, except the WisdomTree Emerging Markets ex-State-Owned Enterprises Index and WisdomTree China ex-State-Owned Enterprises Index (together, the “ex-SOE Indices”) and the CenterSquare New Economy Real Estate Index, is “fundamentally weighted” and differs from most traditional indexes in that the proportion, or “weighting,” of the securities in each Index is based on a measure of fundamental value, such as dividends or earnings. The dividends-based indexes include a risk factor screening process that excludes companies that rank poorly on a combination of Quality and Momentum factors. Most traditional indexes and index funds weight their securities by looking simply at the market capitalization of such securities. The ex-SOE Indices are modified market cap weighted indices. The CenterSquare New Economy Real Estate Index also uses a modified market cap weighting scheme, but the Index adjusts those weights based on the New Economy Score of each constituent.
Each modified dividend weighted Index is weighted based on either the amount of cash dividends that companies in the Index pay, or are expected to pay, or the dividend yield of the companies in the Index. This means that securities of companies that pay, or are expected to pay, higher amounts of cash dividends or have higher dividend yields generally will be more heavily weighted in each Index and Fund. Only regular dividends (i.e., established or quarterly dividends as opposed to non-recurring or special dividends) are included in the determination of cash dividends or dividend yield. For all dividend weighted Indexes and Funds (aside from those focused on quality dividend growth), greater weight relative to cash dividends is given to companies that rank highly on a composite risk factor of quality and momentum.
China ex-State-Owned Enterprises Index. Stock Connect comprises a Northbound Trading Link (for investment in China A-Shares) by which investors, through their Hong Kong brokers and a securities trading service company to be established by SEHK, may be able to place orders to trade eligible shares listed on SSE or SZSE by routing orders to the applicable exchange. Under Stock Connect, overseas investors (including the Fund) may be allowed, subject to rules and regulations issued and/or amended from time to time, to trade China A-Shares listed on the SSE or SZSE (together, the “Mainland Securities”) through the Northbound Trading Link. The Mainland Securities include all the constituent stocks from time to time of the SSE 180 Index and SSE 380 Index, all the constituent stocks of the SZSE Component Index and SZSE Small/Mid Cap Innovation Index that have a market capitalization of not less than RMB 5 billion, and all the SSE- and SZSE-listed China A-Shares that are not included as constituent stocks of the relevant indices but which have corresponding H-Shares listed on SEHK, except (i) those SSE- and SZSE-listed shares which are not traded in RMB and (ii) those SSE- and SZSE-listed shares which are included in the “risk alert board.” The list of eligible securities may be changed subject to the review and approval by the relevant PRC regulators from time to time.
India Earnings Index. The India Earnings Index weights companies based on earning in their fiscal year prior to the annual Index measurement date adjusted for a factor that takes into account shares available to foreign investors. “Earnings” for this Index are determined using a company’s reported net income.
New Economy Real Estate Index. The New Economy Real Estate Index is comprised of global common equity securities consisting of listed REITs and companies identified as being significantly real estate related. Real estate related companies include home builders, C-Corporations in the hotel industry and technology companies whose primary business is real estate related. A multiple-tiered screening process is performed. The first screen is based on a company’s CenterSquare Technology Score. This score is a function of the combination and strength of the following factors:
■ | Technology exposure of the property subsector in which the REIT operates; |
WisdomTree Trust Prospectus 177 |
■ | Presence of assets located in geographies where technology is a significant driver of the local economy; |
■ | Importance of technology-related tenants in the REIT’s rent roll; and |
■ | REIT’s ability to implement technology solutions when operating their assets. |
The New Economy Real Estate Index then screens to eliminate highly levered companies with debt to market capitalization above 70%.
The output of the tiered screening process creates the investable universe of securities. The investable universe is then analyzed and optimized by weighting the holdings to create Index constituents that are technology focused and have attractive growth and valuation characteristics relative to the investable universe.
The initial weights of the securities are dictated by the free float market capitalizations in U.S. dollars.
Non-Principal Information About the Funds’ Investment Strategies
Each Index Fund may invest in other investments that the Fund believes will help it track its Index, including cash and cash equivalents, as well as in shares of other investment companies (including affiliated investment companies, such as ETFs) forward contracts, futures contracts, options on futures contracts, options and swaps.
Temporary Defensive Strategies. Each Active Fund’s investment process is heavily dependent on quantitative models which do not adjust to take temporary defensive positions. However, each Active Fund reserves the right to invest in U.S. government securities, money market instruments, and cash, without limitation, as determined by the Adviser or Sub-Adviser in response to adverse market, economic, political or other conditions. In the event an Active Fund engages in temporary defensive strategies that are inconsistent with its investment strategies, the Active Fund’s ability to achieve its investment objective may be limited.
Securities Lending. Each Fund may lend its portfolio securities in an amount not to exceed one third (33 1/3%) of the value of its total assets via a securities lending program through its securities lending agent, State Street Bank and Trust Company, to brokers, dealers and other financial institutions desiring to borrow securities to complete transactions and for other purposes. A securities lending program allows a Fund to receive a portion of the income generated by lending its securities and investing the respective collateral. A Fund will receive collateral for each loaned security which is at least equal to the market value of that security, marked to market each trading day. In the securities lending program, the borrower generally has the right to vote the loaned securities; however, a Fund may call loans to vote proxies if a material issue affecting the Fund’s economic interest in the investment is to be voted upon. Security loans may be terminated at any time by a Fund.
Additional Principal Risk Information About the Funds
This section provides additional information regarding the principal risks described under “Principal Risks of Investing in the Fund” in the Fund Summaries. Risk information may not be applicable to each Fund. Please consult each Fund's Summary sections to determine which risks are applicable to a particular Fund. Each of the factors below could have a negative impact on Fund performance and trading prices.
Active Management Risk
The Active Funds are actively managed using proprietary investment strategies and processes. Each Active Fund is subject to active management or security-selection risk and its performance therefore will reflect, in part, the ability of the Sub-Adviser to select investments and to make investment decisions that are suited to achieving a Fund’s investment objective. The Sub-Adviser’s assessment of a particular investment, company, sector or country and/or assessment of broader economic, financial or other macro views, may prove incorrect, including because of factors that were not adequately foreseen, and the selection of investments may not perform as well as expected when those investments were purchased or as well as the markets generally, resulting in Fund losses or underperformance. There can be no guarantee that these strategies and processes will produce the intended results and no guarantee that the Active Funds will achieve their investment objectives or outperform other investment strategies over the short- or long-term market cycles. This risk is exacerbated when an investment or multiple investments made as a result of such decisions are significant relative to an Active Fund’s net assets.
AI Model Risk
The International AI Enhanced Value Fund is actively managed using an AI model developed by the Fund's Sub-Adviser. The operation and success of the AI model is heavily dependent not only on its construction, but also on the accuracy and completeness of the data used as inputs into the AI model. To the extent the AI model does not perform as designed or as intended, the Fund may not be able to achieve its investment objective and may lose value. If either or both the AI model and the Data prove to be incorrect or incomplete, any decisions made in reliance thereon may lead to the inclusion or exclusion of securities that would have been excluded or included had the AI model and Data been correct and complete. Errors in the Data, calculations and/or the construction of the AI model may occur from time to time and may not be identified and/or corrected by the Sub-Adviser or the Adviser for a period of time or at all, which may have an adverse impact on the Fund and its shareholders.
178 WisdomTree Trust Prospectus |
Capital Controls and Sanctions Risk
Economic conditions, such as volatile currency exchange rates and interest rates, political events, military action, such as the Russian invasion of Ukraine, and other conditions, may, without prior warning, lead to government intervention (including intervention by the U.S. government with respect to foreign governments, economic sectors, foreign companies and related securities and interests) and the imposition of capital controls and/or sanctions, which may also include retaliatory actions of one government against another government, such as seizure of assets. Capital controls and/or sanctions include the prohibition of, or restrictions on, the ability to own or transfer currency, securities or other assets, which may potentially include derivative instruments related thereto. Levies may be placed on profits repatriated by foreign entities (such as the Funds). Capital controls and/or sanctions may also impact the ability of a Fund to buy, sell, transfer, receive, deliver or otherwise obtain exposure to, foreign securities or currency, negatively impact the value and/or liquidity of such instruments, adversely affect the trading market and price for shares of a Fund, and cause a Fund to decline in value. A Fund may also be forced to sell or otherwise dispose of foreign investments at inopportune times or prices due to sanctions. The type and severity of sanctions and other similar measures, including counter sanctions and other retaliatory actions, that have been imposed against Russia and other countries and that may further be imposed could vary broadly in scope, and their impact is impossible to predict. Sanctions and other similar measures may be in place for a substantial period of time and enacted with limited advanced notice.
Cash Redemption Risk
When a Fund redeems shares for cash or otherwise includes cash as part of its redemption proceeds, it may be required to sell or unwind portfolio investments in order to obtain the cash needed to distribute redemption proceeds. This may cause a Fund to recognize capital gains that it might not have recognized if it had made a redemption in-kind (i.e., distribute securities as payment of redemption proceeds). As a result, the Funds may pay out higher annual capital gain distributions than if the in-kind redemption process was used.
Currency Exchange Rate Risk
Changes in currency exchange rates and the relative value of non-U.S. currencies will affect the value of a Fund’s investments and the value of a Fund’s shares. Because each Fund’s NAV is determined on the basis of U.S. dollars, the U.S. dollar value of your investment in a Fund may go down if the value of the local currency of the non-U.S. markets in which the Fund invests depreciates against the U.S. dollar. This is true even if the local currency value of securities in the Fund’s holdings goes up. Conversely, the dollar value of your investment in the Fund may go up if the value of the local currency appreciates against the U.S. dollar.
The value of the U.S. dollar measured against other currencies is influenced by a variety of factors. These factors include interest rates, national debt levels and trade deficits, changes in balances of payments and trade, domestic and foreign interest and inflation rates, global or regional political, economic or financial events, monetary policies of governments, actual or potential government intervention, and global energy prices. Political instability, the possibility of government intervention and restrictive or opaque business and investment policies may also reduce the value of a country’s currency. Government monetary policies and the buying or selling of currency by a country’s government may also influence exchange rates. Currency exchange rates can be very volatile and can change quickly and unpredictably. As a result, the value of an investment in a Fund may change quickly, unpredictably, and without warning, and you may lose money.
Cybersecurity Risk
The Funds and their service providers may be susceptible to operational and information security risks resulting from a breach in cybersecurity, including cyber-attacks. A breach in cybersecurity, intentional or unintentional, may adversely impact the Funds in many ways, including, but not limited to, disruption of a Fund’s operational capacity, loss of proprietary information, theft or corruption of data maintained online or digitally, denial-of-service attacks on websites or network resources, and the unauthorized release of confidential information. Cyber-attacks affecting a Fund’s third-party service providers, including the Adviser, Sub-Adviser, administrator, custodian, and transfer agent, may subject a Fund to many of the same risks associated with direct cybersecurity breaches and adversely impact the Fund. For instance, cyber-attacks may impact a Fund’s ability to calculate its NAV, cause the release of confidential business information, impede trading, cause a Fund to incur additional compliance costs associated with corrective measures, subject a Fund to regulatory fines or other financial losses, and/or cause reputational damage to a Fund. Cybersecurity breaches of market makers, Authorized Participants, or the issuers of securities in which a Fund invests also could have material adverse consequences on a Fund’s business operations and cause financial losses for a Fund and its shareholders. While the Funds and their service providers have established business continuity plans and risk management systems designed to address cybersecurity risks, prevent cyber-attacks and mitigate the impact of cybersecurity breaches, there are inherent limitations on such plans and systems. In addition, the Funds have no control over the cybersecurity protections put in place by their service providers or any other third parties whose operations may affect the Funds or their shareholders.
WisdomTree Trust Prospectus 179 |
Derivatives Risk
Certain Funds may invest in derivatives, such as forward currency contracts and/or currency futures contracts to pursue their investment objectives. Specifically, the Funds may use derivatives to hedge against foreign currency exposure. The use of such derivatives may expose the Fund to risks in addition to and greater than those associated with investing directly in the instruments underlying those derivatives, including risks relating to leverage, correlation (imperfect correlations with underlying instruments or the Fund’s other portfolio holdings), volatility, lack of availability, counterparty credit, liquidity, and valuation. The use of such derivatives also may expose the Funds to the performance of investments that they do not own. To the extent a Fund engages in derivatives in an attempt to hedge certain exposures or risks, there can be no assurance that such hedging investments or transactions will be effective. In addition, hedging investments or transactions involve costs and may reduce gains or result in losses, which may adversely affect the Funds. The skills necessary to successfully execute derivatives strategies may be different from those for more traditional portfolio management techniques, and if the Sub-Adviser is incorrect about its expectations of market conditions, the use of derivatives also could result in a loss, which in some cases may be unlimited.
Funds that invest in derivatives are also subject to the risk that a change in U.S. law and related regulations will impact the way the they operate, increase the particular costs of their operation and/or change the competitive landscape. In October 2020, the SEC adopted a new rule governing a fund’s use of derivatives. The new rule, among other things, generally requires a fund to adopt a derivatives risk management program, appoint a derivatives risk manager to oversee the program and comply with an outer limit on fund leverage risk based on value at risk, or “VaR.” The new rule significantly changes the regulatory framework applicable to a fund's use of derivatives, including by replacing the existing asset segregation regulatory framework in its entirety. It is not currently clear what impact, if any, the new rule will have on the availability, liquidity or performance of derivatives.
Forward Currency Contracts
A forward currency contract is an agreement to buy or sell a specific currency on a future date at a set price thereby effectively locking in the exchange rate for the purchase or sale of that currency. Forward currency contracts are traded in the over-the-counter market and generally are not subject to initial or upfront margin requirements. As a result, forward currency contracts are particularly subject to counterparty credit risk, including that a counterparty may be unwilling or unable to meet its contractual obligations.
Currency Futures Contracts
A currency futures contract is an exchange-traded contract that provides for the future purchase or sale of a currency at a specified price of another currency. Risks of investing in currency futures contracts include but are not limited to: (1) the success of the adviser’s and sub-adviser’s ability to predict movements in the prices of individual currencies; (2) an imperfect correlation between the movements in the price of the futures contract and the underlying currency; and (3) that there is no guarantee that an active trading market will exist for the currency futures contracts at any particular time.
Foreign Securities Risk
Investments in non-U.S. securities and instruments involve political, regulatory, and economic risks that may not be present in U.S. securities. For example, investments in non-U.S. securities may be subject to risk of loss due to foreign currency fluctuations, political or economic instability, or geographic events that adversely impact issuers of foreign securities. There may be less information publicly available about a non-U.S. issuer than a U.S. issuer. Non-U.S. issuers may be subject to different accounting, auditing, financial reporting and investor protection standards than U.S. issuers. Investments in non-U.S. securities may be subject to withholding or other taxes and may be subject to additional trading, settlement, custodial, and operational risks. With respect to certain countries, there is the possibility of government intervention and expropriation or nationalization of assets. Because legal systems differ, there is also the possibility that it will be difficult to obtain or enforce legal judgments in certain countries. Since foreign exchanges may be open on days when a Fund does not price its shares, the value of the securities in a Fund’s portfolio may change on days when shareholders will not be able to purchase or sell a Fund’s shares. Conversely, Fund shares may trade on days when foreign exchanges are closed. Each of these factors can make investments in a Fund more volatile and potentially less liquid than other types of investments and may be heightened in connection with investments in developing or emerging markets countries. Foreign securities also include American Depositary Receipts (“ADRs”), which are U.S. dollar-denominated receipts representing shares of foreign-based corporations. ADRs are issued by U.S. banks or trust companies and entitle the holder to all dividends and capital gains that are paid out on the underlying foreign shares. Global Depositary Receipts (“GDRs”), which are similar to ADRs, represent shares of foreign-based corporations and are generally issued by international banks in one or more markets around the world. Investments in ADRs and GDRs may be less liquid and more volatile than underlying shares in their primary trading markets.
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Geographic Investment Risk
To the extent that a Fund invests a significant portion of its assets in the securities of companies of a single country or region, it is more likely to be impacted by events or conditions affecting that country or region. For example, political and economic conditions and changes in regulatory, tax, or economic policy in a country could significantly affect the market in that country and in surrounding or related countries and have a negative impact on the Fund’s performance. Currency developments or restrictions, political and social instability, and changing economic conditions have resulted in significant market volatility.
Emerging Markets Risk
Investments in securities and instruments traded in developing or emerging markets, or that provide exposure to such securities or markets, can involve additional risks relating to political, economic, or regulatory conditions not associated with investments in U.S. securities and instruments or investments in more developed international markets. For example, emerging markets may be subject to (i) greater market volatility, (ii) lower trading volume and liquidity, (iii) greater social, political and economic uncertainty, (iv) governmental controls on foreign investments, market manipulation concerns, and limitations on repatriation of invested capital, (v) lower disclosure, corporate governance, accounting, auditing, financial reporting and recordkeeping standards, (vi) fewer protections of property rights, (vii) limited investor rights and legal or practical remedies available to the Fund against portfolio companies, (viii) restrictions on the transfer of securities or currency or payment of dividends and (ix) settlement and trading practices that differ from U.S. markets. Each of these factors may impact a Fund’s ability to buy, sell, transfer, receive, deliver or otherwise obtain exposure to, emerging market securities or currency, negatively impact the value and/or liquidity of such instruments, adversely affect the trading market and price for shares of the Fund and cause a Fund to decline in value. The volatility of emerging markets may be heightened by the actions (such as significant buying and selling) of a few major investors. For example, substantial increases or decreases in cash flows of funds investing in these markets could significantly affect local securities’ prices and cause Fund share prices to decline. For these and other reasons, investments in emerging markets are often considered speculative.
Investments in Asia and the Pacific Region
While certain economies in this region are exemplars of growth and development, others have been and continue to be subject, to some extent, to over-extension of credit, currency devaluations and restrictions, high unemployment, high inflation, decreased exports, and economic recessions. Each of these factors may impact the ability of a Fund to buy, sell or otherwise transfer securities, adversely affect the trading market and price for Fund shares and cause Fund shares to decline in value.
Investments in Australia
Investment in Australian issuers may subject the Fund to regulatory, political, currency, security, and economic risk specific to Australia. The Australian economy is heavily dependent on exports from the energy, agricultural and mining sectors. As a result, the Australian economy is susceptible to fluctuations in the commodity markets. The Australian economy is also becoming increasingly dependent on its growing services industry. The Australian economy is dependent on trading with key trading partners and economic events affecting the economies of such trading partners can affect the Australian economy as well. A slowdown in any of the Australian economies key sectors or in the economies of its key trading partners may negatively affect the fund’s investments in Australia.
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Investments in China
Although the Chinese economy has grown rapidly during recent years and the Chinese government has implemented significant economic reforms to liberalize trade policy, promote foreign investment, and reduce government control of the economy, there can be no guarantee that economic growth or these reforms will continue. Economic liberalization in China may also result in disparities of wealth that lead to social disorder, including violence and labor unrest. The Chinese economy may also experience slower growth if global or domestic demand for Chinese goods decreases significantly and/or key trading partners apply trade tariffs or implement other protectionist measures. The Chinese economy is also susceptible to rising rates of inflation, economic recession, market inefficiency, volatility, and pricing anomalies that may be connected to governmental influence, a lack of publicly-available information and/or political and social instability. Strained relationships with neighboring countries, including any military conflicts in response to such confrontations, may negatively impact China’s economic development and destabilize the region. The government of China maintains strict currency controls in order to achieve economic, trade and political objectives and regularly intervenes in the currency market. The Chinese government places strict regulation on the Renminbi and Hong Kong dollar and manages the Renminbi and Hong Kong dollar so that they have historically traded in a tight range relative to the U.S. dollar. The Chinese government has been under pressure to manage the currency in a less restrictive fashion so that it is less correlated to the U.S. dollar. It is expected that such action would increase the value of the Renminbi and the Hong Kong dollar relative to the U.S. dollar. Of course, there can be no guarantee that this will occur, or that the Renminbi or the Hong Kong dollar will move in relation to the U.S. dollar as expected. The Chinese government also plays a major role in the country’s economic policies regarding foreign investments. Foreign investors are subject to the risk of loss from expropriation or nationalization of their investment assets and property, governmental restrictions on foreign investments and the repatriation of capital invested.
The Chinese government exercises control over and exhibits regulatory interest in certain sectors and industries (e.g., financial services, telecommunications, technology and education). Significant regulation of investment with respect to such sectors and industries is still pervasive, including restrictions on investment in companies deemed to be sensitive to particular national interests, trading of securities of Chinese issuers, foreign ownership of Chinese corporations and/or the repatriation of assets by foreign investors. Governmental restrictions on foreign ownership of securities may have adverse effects on the liquidity and performance of certain of the Fund’s portfolio holdings and could lead to greater tracking error. Similarly, government intervention in the operations and structure of companies permitting direct or indirect investment by foreign investors, such as the Fund, may negatively affect the value of the Fund’s investments. The Fund expects to invest, at times to a significant extent, in variable interest entity (“VIE”) structures. VIE structures can vary, but generally consist of a U.S.-listed company with contractual arrangements, through one or more wholly-owned special purpose vehicles, with a Chinese company that ultimately provides the U.S.-listed company with contractual rights to exercise control over and obtain economic benefits from the Chinese company. Although the U.S.-listed company in a VIE structure has no equity ownership in the underlying Chinese company, the VIE contractual arrangements permit the VIE to consolidate its financial statements with those of the underlying Chinese company. Intervention by the Chinese government with respect to a VIE could significantly and adversely affect the Chinese company’s performance and thus, the value of the Fund’s investment in the VIE, as well as the enforceability of the VIE’s contractual arrangements with the Chinese company. In the event of such an occurrence, the Fund, as a foreign investor, may have little or no legal recourse.
Chinese securities markets and the activities of investors, brokers and other participants are subject to less regulation and monitoring than in the U.S. Accordingly, issuers of securities in China, including Chinese companies that are listed on U.S. exchanges, are not subject to the same degree of regulation as are U.S. issuers with respect to such matters as insider trading rules, tender offer regulation, accounting standards or auditor oversight, stockholder proxy requirements and the requirements mandating timely and accurate disclosure of information. The Chinese government has taken positions that prevent the U.S. Public Company Accounting Oversight Board (“PCAOB”) from inspecting the audit work and practices of accounting firms in mainland China and Hong Kong for compliance with U.S. law and professional standards. Audits performed by PCAOB-registered accounting firms in mainland China and Hong Kong may be less reliable than those performed by firms subject to PCAOB inspection. Accordingly, information about the Chinese securities in which the Fund invests may be less reliable or incomplete. Under amendments to the Sarbanes-Oxley Act of 2002 enacted in December 2020, which requires that the PCAOB be permitted to inspect the accounting firm of a U.S.-listed Chinese issuer, Chinese companies with securities listed on U.S. exchanges may be delisted if the PCAOB is unable to inspect the accounting firm. These conditions may create significant obstacles to obtaining information necessary for investigations into or litigation against Chinese companies, and shareholders, such as the Fund, may have limited legal remedies. China’s authoritarian government has also used force in the past to suppress civil dissent, and China’s foreign and domestic policies remain in conflict with those of Hong Kong as well as nationalist and religious groups in Xinjiang and Tibet. These and other factors could have a negative impact on the Chinese economy as a whole.
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Investments in Europe
Most developed countries in Western Europe are members of the European Union (“EU”), many are also members of the European Economic and Monetary Union (“EMU”), and most EMU members are part of the euro zone, a group of EMU countries that share the euro as their common currency. Members of the EMU must comply with restrictions on inflation rates, deficits, debt levels, and fiscal and monetary controls. The implementation of any of these EMU restrictions or controls, as well as any of the following events in Europe, may have a significant impact on the economies of some or all European countries: (i) the default or threat of default by an EU member country on its sovereign debt, (ii) economic recession in an EU member country, (iii) changes in EU or governmental regulations on trade, (iv) substantial changes in currency exchange rates of the euro, the British pound, and other European currencies, (v) significant changes in the supply and demand for European imports or exports, and (vi) high unemployment rates.
Effective January 1, 2021, the United Kingdom left the EU single market and customs union (“Brexit”) under the terms of a new trade agreement. The trade agreement governs the relationship between the United Kingdom and EU with respect to trading goods and services, but critical aspects of the relationship remain unresolved and subject to further negotiation and agreement. Brexit may also impact markets of the United Kingdom and the EU, as well as global markets, should it lead to the creation of divergent national laws and regulations that produce new legal regimes and unpredictable tax consequences. As a result of the uncertain consequences of Brexit, the economies of the United Kingdom and Europe as well as the broader global economy could be significantly impacted, which may result in increased volatility and illiquidity, and potentially lower economic growth on markets in the United Kingdom, Europe and globally. Any or all of these consequences could potentially have an adverse effect on the value of the Fund’s investments.
In addition, the extent and duration of Russia’s military invasion of Ukraine, initiated in February 2022, and the broad-ranging economic sanctions levied against Russia by the United States, the EU, the United Kingdom, and other countries, including counter sanctions and other retaliatory actions levied by Russia, are impossible to predict, but these events could have a significant adverse impact on Europe’s overall economy. Further, an escalation of the military conflict beyond Ukraine’s borders could result in significant, long-lasting damage to the economies of Eastern and Western Europe as well as the global economy. These and any related events could significantly and adversely affect a Fund’s performance and the value of an investment in such Fund, even in the absence of direct exposure to Russian issuers or issuers in other countries affected by the invasion.
Investments in France
France, as a member of the EMU, must comply with certain restrictions on inflation rates, deficits, debt levels, and fiscal and monetary controls. The implementation of any such restrictions or controls, the default of an EU member country on its sovereign debt, significant fluctuations in the euro’s exchange rate, or a change in EU or governmental trade regulations could each have a significant impact on the French economy as well as the economies of some or all European countries. In addition, the French economy is dependent to a significant extent on the economies of certain key trading partners, including Germany and other Western European countries. A reduction in spending on French products and services or changes in any of the economies may cause economic adversity in France. France also depends on the strength of its agricultural exports and, thus, is vulnerable to fluctuations in demand for agricultural products. In addition, France has been subject to acts of terrorism, which has created a climate of insecurity that has been detrimental to tourism and may lead to further adverse economic consequences. These and other factors, including the potential consequences of sanctions related to the Russian invasion of Ukraine and the withdrawal of the United Kingdom from the EU, as described under “Investments in Europe,” could have a negative impact on a Fund’s performance.
Investments in Germany
Germany is a member of the EMU. EMU member countries share coordinated economic policies and a common currency. Members of the EMU must comply with restrictions on inflation rates, deficits, debt levels, and fiscal and monetary controls. The implementation of any such restrictions or controls, the default of an EU member country on its sovereign debt, significant fluctuations in the euro’s exchange rate, or a change in EU or governmental trade regulations could each have a significant impact on the German economy as well as the economies of some or all European countries. In addition, challenges related to the rebuilding of infrastructure and unemployment in the former area of East Germany may also impact the economy of Germany. These and other factors, including the potential consequences of sanctions related to the Russian invasion of Ukraine and the withdrawal of the United Kingdom from the EU as described under “Investments in Europe,” could have a negative impact on the Fund’s performance.
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Investments in India
Political and economic conditions and changes in regulatory, tax, or economic policy in India could significantly affect the market in India and in surrounding or related countries and could have a negative impact on Funds that invest in India. The Indian economy may differ favorably or unfavorably from the U.S. economy in such respects as the rate of growth of gross domestic product, the rate of inflation, capital reinvestment, resource self-sufficiency and balance of payments position. The Indian government has exercised and continues to exercise significant influence over many aspects of the economy, and the number of public sector enterprises in India is substantial. Accordingly, Indian government actions in the future could have a significant effect on the Indian economy.
With the exception of the economic downturn in 2020, over the last several years, the Indian economy has experienced generally sustained growth. There are no guarantees this will continue. While the Indian government has implemented economic structural reforms with the objective of liberalizing India’s exchange and trade policies, reducing the fiscal deficit, controlling inflation, promoting a sound monetary policy, reforming the financials sector, and placing greater reliance on market mechanisms to direct economic activity, there can be no assurance that these policies will continue or that the economic recovery will be sustained. Religious and border disputes persist in India. In addition, India has experienced civil unrest and hostilities with neighboring countries such as Pakistan and China. The Indian government has confronted separatist movements in several Indian states. Investment and repatriation restrictions and tax laws in India may impact the ability of a Fund to track its index.
Investments in Italy
Italy, as a member of the EMU, must comply with certain restrictions on inflation rates, deficits, debt levels, and fiscal and monetary controls. The implementation of any such restrictions or controls, the default of an EU member country on its sovereign debt, significant fluctuations in the euro’s exchange rate, or a change in EU or governmental trade regulations could each have a significant impact on the Italian economy as well as the economies of some or all European countries. Italy’s economy is dependent upon trade with other economies, specifically Germany, France, other Western European developed countries and the U.S. As a result, Italy is dependent on the economies of these other countries, and any change in the price or demand for Italy’s exports may have an adverse impact on its economy. Recently, the Italian economy has experienced volatility due to concerns about economic downturn and rising government debt levels which has adversely impacted the Italian economy, causing credit agencies to lower Italy’s sovereign debt rating, and could decrease outside investment in Italian companies. These and other factors, including the potential consequences of sanctions related to the Russian invasion of Ukraine and the withdrawal of the United Kingdom from the EU as described under “Investments in Europe,” could have a negative impact on a Fund’s performance.
Investments in Japan
Economic growth in Japan is heavily dependent on international trade, government support, and consistent government policy supporting its export market. Slowdowns in the economies of key trading partners such as the United States, China and countries in Southeast Asia could have a negative impact on the Japanese economy as a whole. Trade tariffs and other protectionist measures could also have an adverse impact on the Japanese export market. The Japanese economy has in the past been negatively affected by, among other factors, government intervention and protectionism and an unstable financial services sector. While the Japanese economy has recently emerged from a prolonged economic downturn, some of these factors, as well as other adverse political developments, increases in government debt, changes to fiscal, monetary or trade policies, escalating political tension in the region, or other events, such as natural disasters, could have a negative impact on Japanese securities.
Investments in the Netherlands
The Netherlands, as a member of the EMU, must comply with certain restrictions on inflation rates, deficits, debt levels, and fiscal and monetary controls. The implementation of any such restrictions or controls, the default of an EU member country on its sovereign debt, significant fluctuations in the euro’s exchange rate, or a change in EU or governmental trade regulations could each have a significant impact on the Dutch economy as well as the economies of some or all European countries. The Netherlands lacks many natural resources and, thus, is dependent on trade partners and vulnerable to fluctuations or shortages in commodity markets. The Dutch economy relies on export of financial services to other European countries. European financial markets have from time to time been adversely affected by fiscal crises in other European nations, including Greece, Ireland, Italy, Portugal and Spain. As a result, the Netherlands may have trouble accessing capital markets and may be forced to pay higher interest rates on its debt than if it did not use the euro as its currency. In addition, the Netherlands may be indirectly exposed to the debt of the aforementioned countries through its banking sector. These and other factors, including the potential consequences of sanctions related to the Russian invasion of Ukraine and the withdrawal of the United Kingdom from the EU as described under “Investments in Europe,” could have a negative impact on a Fund’s performance.
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Investments in Spain
The Spanish economy, along with certain other EU economies, has from time to time experienced a significant financial market volatility and economic adversity due to concerns about economic downturn, political instability and government debt levels. Interest rates on Spain’s sovereign debt may rise to levels that may make it difficult for it to service high debt levels without significant financial help from the EU and could potentially lead to default. In addition, unemployment rates remain high. These factors could adversely impact growth potential of Spanish stocks. In addition, the Spanish government is engaged in a long-running campaign against terrorism. Acts of terrorism on Spanish soil or against Spanish interests abroad may cause uncertainty in the Spanish financial markets and adversely affect the performance of the issuers to which the Fund has exposure. Political tensions and social conflict have escalated as a result of a referendum by Catalonia for independence from Spain. The secessionist movement could have a negative impact on the Spanish economy and a destabilizing effect on the country. These and other factors, including the potential consequences of sanctions related to the Russian invasion of Ukraine and the withdrawal of the United Kingdom from the EU as described under “Investments in Europe,” could have a negative impact on a Fund’s performance.
Investments in Sweden
Sweden’s largest trading partners include the United States, Germany and certain other Western European nations. As a result, the economy of Sweden may be significantly affected by changes in the economies, trade regulations, currency exchange rates, and monetary policies of these trading partners. In addition, Sweden maintains a robust social welfare system, and Sweden’s workforce is highly unionized. As a result, Sweden’s economy may experience, among other things, increased government spending, higher production costs, and lower productivity. These and other factors, including the potential consequences of sanctions related to the Russian invasion of Ukraine and the withdrawal of the United Kingdom from the EU as described under “Investments in Europe,” could have a negative impact on a Fund’s performance.
Investments in Switzerland
Although Switzerland is not a member of the EU, the Swiss economy is heavily dependent on the economies of the United States and other European nations as key trading partners. In particular, Switzerland depends on international trade and exports to generate economic growth. As a result, future changes in the price or the demand for Swiss products or services by these trading partners, or changes in these countries’ economies, trade regulations or currency exchange rates could adversely impact the Swiss economy. In addition, due to Switzerland’s limited natural resources, the economy of Switzerland may be impacted by extreme price fluctuations in the price of certain raw materials. Moreover, the Swiss economy relies heavily on the banking sector. Recent allegations that certain Swiss banking institutions marketed and sold offshore tax evasion services to U.S. citizens may adversely impact the Swiss economy. These and other factors, including the potential consequences of sanctions related to the Russian invasion of Ukraine and the withdrawal of the United Kingdom from the EU as described under “Investments in Europe,” could have a negative impact on a Fund’s performance.
Investments in Taiwan
The economy of Taiwan is heavily dependent on exports. Currency fluctuations, increasing competition from Asia’s other emerging economies, and conditions that weaken demand for Taiwan’s export products worldwide could have a negative impact on the Taiwanese economy as a whole. Additionally, Taiwan has few natural resources. Any fluctuation or shortage in the commodity markets could have a negative impact on the Taiwanese economy. Concerns over Taiwan’s history of political contention and its current relationship with China may also have a significant impact on the economy of Taiwan.
Investments in the United Kingdom
The United Kingdom has one of the largest economies in Europe and trades heavily with other European countries and the United States. The economy of the United Kingdom may be impacted by changes to the economic health of other European countries and the United States. The United Kingdom also relies heavily on the export of financial services. Accordingly, a slowdown in the financial services sector may have an adverse impact on the United Kingdom’s economy. The United Kingdom formally exited from the EU on January 31, 2020. For more information about “Brexit” and the associated risks, see the above description of “Investments in Europe.” These and other factors, including the potential consequences of sanctions related to the Russian invasion of Ukraine, could have a negative impact on a Fund’s performance.
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Geopolitical Risk
Some countries and regions in which the Funds invest have experienced security concerns, war, threats of war, aggression and/or conflict, terrorism, economic uncertainty, sanctions or the threat of sanctions, natural and environmental disasters, the spread of infectious illness, widespread disease or other public health issues and/or systemic market dislocations (including due to events outside of such countries or regions) that have led, and in the future may lead, to increased short-term market volatility and may have adverse long-term effects on the U.S. and world economies and markets generally. Such geopolitical and other events also may disrupt securities markets and, during such market disruptions, a Fund’s exposure to the other risks described herein will likely increase. For example, a market disruption may adversely affect the orderly functioning of the securities markets. Each of the foregoing may negatively impact the Fund’s investments.
Hedging Risk
Derivatives used by the Fund to offset its exposure to foreign currencies represented in the Index may not perform as intended. When a derivative is used as a hedge against a position that a Fund holds, any loss generated by the derivative generally should be substantially offset by gains on the hedged investment, and vice versa. While hedging can reduce or eliminate losses, it can also reduce or eliminate gains. Hedges are sometimes subject to imperfect matching between the hedging transaction and the risk sought to be hedged. Since the derivatives used by a Fund to offset foreign currency exposure are generally reset on a monthly basis, currency risk can develop intra-month. There can be no assurance that a Fund’s hedging transactions will be effective. Each Fund does not attempt to mitigate other factors which may have a greater impact on the Fund’s equity holdings and its performance than currency exposure. In addition, a Fund may not be fully hedged at all times in order to minimize transaction costs or for other reasons. The value of an investment in a Fund could be significantly and negatively impacted if foreign currencies represented in the Index appreciate at the same time that the value of the Fund’s equity holdings fall.
Index and Data Risk
The Index Funds, which employ a “passive management” - or indexing - investment approach, seek to track the price and yield performance, before fees and expenses, of the applicable Index. An Index may not perform as intended. Each Index provider has the right to make adjustments to the Index or to cease making the Index available without regard to the particular interests of the Index Fund or its shareholders. While the Index provider provides a rules-based methodology that describes what each Index is designed to achieve within a particular set of rules, neither the Index provider, its agents nor data providers provide any warranty or accept any liability in relation to the quality, accuracy or completeness of the applicable Index, its calculation, valuation or its related data, and they do not guarantee that the applicable Index will be in line with the Index provider’s methodology, regardless of whether or not the Index provider is affiliated with the Adviser. The composition of the Index is dependent on data from one or more third parties and/or the application of such data within the rules of the Index methodology, which may be based on assumptions or estimates. If the computers or other facilities of the Index provider, Index calculation agent, data providers and/or relevant stock exchange malfunction for any reason, calculation and dissemination of Index values may be delayed and trading in Index Fund shares may be suspended for a period of time. Errors in Index data, Index computations and/or the construction of the Indexes may occur from time to time and may not be identified and/or corrected by the Index provider, Index calculation agent or other applicable party for a period of time or at all, which may have an adverse impact on an Index Fund and its shareholders. The potential risk of continuing error may be particularly heightened in the case of the Indexes, which are generally not used as benchmarks by other funds or managers. Any of the foregoing may lead to the inclusion of securities in an Index, exclusion of securities from an Index or the weighting of securities in an Index that would have been different had data or other information been correct or complete, which may lead to a different investment outcome than would have been the case had such events not occurred. The Adviser, through a Sub-Adviser, seeks to manage each Index Fund to correspond to the applicable Index provided by the Index provider. Consequently, losses or costs associated with an Index’s errors or other risks described above will be borne by the relevant Fund and its shareholders and neither the Adviser nor its affiliates or agents make any representations or warranties regarding the foregoing.
Investment Risk
As with all investments, an investment in a Fund is subject to loss. Investors in a Fund could lose money, including the possible loss of the entire principal amount of an investment, over short or long periods of time. An investment in a Fund is not a bank deposit and it is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
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Investment Style Risk
Each of the Index Funds invests in the securities included in, or representative of, its Fund’s Index regardless of their investment merit. Each Index Funds do not attempt to outperform the Fund’s Indexes or take defensive positions in declining markets. As a result, each Index Fund’s performance may be adversely affected by a general decline in the market segments relating to the Fund’s Index. The returns from the types of securities in which each of the Index Funds invests may underperform returns from the various general securities markets or different asset classes. This may cause a Fund to underperform other investment vehicles that invest in different asset classes. Different types of securities (for example, large-, mid- and small-capitalization stocks) tend to go through cycles of doing better – or worse – than the general securities markets. In the past, these periods have lasted for as long as several years.
Dividend Paying Securities Risk
Securities that pay dividends, as a group, may be out of favor with the market and underperform the overall equity market or stocks of companies that do not pay dividends. In addition, changes in the dividend policies of the companies held by a Fund (which may be due to forces outside of a company’s control, such as political, social or other pressures) or the capital resources available for such company’s dividend payments may adversely affect the Fund. In the event a company reduces or eliminates its dividend, a Fund may not only lose the dividend payout but the stock price of the company may also fall.
Growth Investing Risk
Growth stocks, as a group, may be out of favor with the market and underperform value stocks or the overall equity market. Growth stocks generally are priced higher than non-growth stocks, in relation to the issuer’s earnings and other measures, because investors believe they have greater growth potential, but there is no guarantee that their growth potential will be realized. Growth stocks are generally more sensitive to market movements than other types of stocks primarily because their prices are based heavily on future expectations. If investors believe an issuing company’s future earnings expectations will not be met, growth stock prices can decline rapidly and significantly. An investment in growth stocks may also be susceptible to rapid price swings during periods of economic uncertainty.
Value Investing Risk
Value stocks, as a group, may be out of favor with the market and underperform growth stocks or the overall equity market. Value stocks tend to be inexpensive relative to their earnings or assets compared to other types of stocks. Value investing focuses on companies whose stocks appear undervalued, but value stocks may not realize their perceived intrinsic value for extended periods of time or may never realize their perceived intrinsic value.
Issuer-Specific Risk
Changes in the actual or perceived financial condition of an issuer or counterparty, changes in specific economic or political conditions that affect a particular type of security or issuer, and changes in general economic or political conditions can affect a security’s or instrument’s value. The value of securities of smaller, less well-known issuers can be more volatile than that of larger issuers. Issuer-specific events can have a negative impact on the value of a Fund.
Market Capitalization Risk
Large-Capitalization Investing
The securities of large-capitalization companies may underperform securities of smaller companies or the market as a whole. The securities of large-capitalization companies may be relatively mature compared to smaller companies and therefore subject to slower growth during times of economic expansion. Large-capitalization companies may also be unable to respond quickly to new competitive challenges, such as changes in technology and consumer tastes.
Mid-Capitalization Investing
The securities of mid-capitalization companies may be more vulnerable to adverse issuer, market, political, or economic developments than securities of large-capitalization companies, but mid-capitalization companies may also underperform the securities of small-capitalization companies because medium capitalization companies are more mature and are subject to slower growth during economic expansion. The securities of mid-capitalization companies generally trade in lower volumes and are subject to greater and more unpredictable price changes than large capitalization stocks or the stock market as a whole. Some medium capitalization companies have limited product lines, markets, financial resources, and management personnel and tend to concentrate on fewer geographical markets relative to large-capitalization companies.
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Small-Capitalization Investing
The securities of small-capitalization companies may be more vulnerable to adverse issuer, market, political, or economic developments than securities of larger-capitalization companies. The securities of small-capitalization companies generally trade in lower volumes and are subject to greater and more unpredictable price changes than larger capitalization stocks or the stock market as a whole. Some small-capitalization companies have limited product lines, markets, and financial and managerial resources and tend to concentrate on fewer geographical markets relative to larger capitalization companies. There is typically less publicly available information concerning smaller-capitalization companies than for larger, more established companies. Small-capitalization companies also may be particularly sensitive to changes in interest rates, government regulation, borrowing costs and earnings.
Market Risk
The trading prices of equity securities and other instruments fluctuate in response to a variety of factors. These factors include events impacting the entire market or specific market segments, such as political, market and economic developments, including, but not limited to, changes in interest rates, government regulation, and the outlook for economic growth or recession, as well as events that impact specific issuers, such as changes to an issuer’s actual or perceived creditworthiness. A Fund’s NAV and market price, like security and commodity prices generally, may fluctuate significantly in response to these and other factors. As a result, an investor could lose money over short or long periods of time.
Recent Events
Russia’s military invasion of Ukraine in February 2022, the resulting responses by the United States and other countries, and the potential for wider conflict could increase volatility and uncertainty in the financial markets and adversely affect regional and global economies for the foreseeable future. In response to Russia’s actions, the governments of the United States, the European Union, the United Kingdom, and many other countries collectively imposed broad-ranging economic sanctions on Russia, certain Russian individuals, banking entities and corporations, and Belarus as a response to Russia’s invasion of Ukraine, and may impose sanctions on other countries that provide military or economic support to Russia. The sanctions restrict companies from doing business with Russia and Russian companies, prohibit transactions with the Russian central bank and other key Russian financial institutions and entities, ban Russian airlines and ships from using many other countries’ airspace and ports, respectively, and place a freeze on certain Russian assets. The sanctions also removed some Russian banks from the Society for Worldwide Interbank Financial Telecommunications (SWIFT), the electronic network that connects banks globally to facilitate cross-border payments. In addition, the United States and the United Kingdom have banned oil and other energy imports from Russia, as well as other popular Russian exports, such as diamonds, seafood and vodka. The European Union, the United Kingdom and other countries have also placed restrictions on certain oil, energy and luxury good imports from Russia. The extent and duration of Russia’s military actions and the repercussions of such actions (including any retaliatory actions or countermeasures that may be taken by those subject to sanctions, including cyber attacks) are impossible to predict, but could result in significant market disruptions, including in certain industries or sectors, such as the oil and natural gas markets, and may negatively affect global supply chains, inflation and global growth. These and any related events could significantly impact the Fund’s performance and the value of an investment in the Fund, even if the Fund does not have direct exposure to Russian issuers or issuers in other countries affected by the invasion.
Financial markets around the world may experience extreme volatility, depressed valuations, decreased liquidity and heightened uncertainty and turmoil resulting from major cybersecurity events, geopolitical events (including wars, such as Russia’s invasion of Ukraine, terror attacks, and disruptions to foreign economic and trade relationships), public health emergencies, such as the COVID-19 pandemic, measures to address budget deficits, downgrading of sovereign debt, and public sentiment, among other events. Resulting market volatility, dramatic changes to interest rates, and otherwise unfavorable economic conditions may negatively impact Fund performance or impair a Fund’s ability to achieve its investment objective.
In March 2023, the financial distress of certain financial institutions raised economic concerns over disruption in the U.S. banking system and regarding the solvency of certain financial services firms. There can be no certainty that the actions taken by the U.S. government to strengthen public confidence in the U.S. banking system will be effective in mitigating the effects of financial institution failures on the economy and restoring public confidence in the U.S. banking system.
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Models and Data Risk
The Active Funds (except the International AI Enhanced Value Fund) are actively managed based upon the Adviser’s quantitative model, which is heavily dependent on data from one or more third parties and may not perform as intended. If the computers or other facilities of the data providers malfunction for any reason, model calculation and dissemination may be delayed, and trading of Fund shares may be suspended for a period of time. Errors in the model data, calculations and/or the construction of the model may occur from time to time and may not be identified and/or corrected by the Adviser or other applicable party for a period of time or at all, which may have an adverse impact on a Fund and its shareholders. The potential risk of continuing error may be particularly heightened in the case of the model, which will likely not be used by other funds or managers.
Non-Correlation Risk
As with all index funds, the performance of an Index Fund and its Index may vary somewhat for a variety of reasons. For example, each Index Fund incurs operating expenses and portfolio transaction costs, while also managing cash flows and potential operational inefficiencies, not incurred by its Index. In addition, an Index Fund may not be fully invested in the securities of its Index at all times or may hold securities not included in its Index or may be subject to pricing differences, differences in the timing of dividend accruals, tax gains or losses, currency convertibility and repatriation, operational inefficiencies and the need to meet various new or existing regulatory requirements. For example, it may take several business days for additions and deletions to an Index to be reflected in the portfolio composition of an Index Fund. The use of sampling techniques may affect an Index Fund’s ability to achieve close correlation with its Index. By using a representative sampling strategy, an Index Fund generally can be expected to have a greater non-correlation risk and this risk may be heightened during times of market volatility or other unusual market conditions. In addition, when markets are volatile, the ability to sell securities at fair value prices may be adversely impacted and may result in additional trading costs and/or increase the Index tracking risk.
Non-Diversification Risk
Each Fund is considered to be non-diversified. This means that each Fund may invest more of its assets in the securities of a single issuer or a smaller number of issuers than if it was a diversified fund. As a result, a Fund may be more exposed to the risks associated with and developments affecting an individual issuer or a smaller number of issuers than a fund that invests more widely. This may increase a Fund’s volatility and cause the performance of a relatively smaller number of issuers to have a greater impact on a Fund’s performance. However, each Fund intends to satisfy the asset diversification requirements under Subchapter M of the Internal Revenue Code of 1986, as amended, for qualification as a regulated investment company (“RIC”). See the “Taxes – Qualification as a Regulated Investment Company” section of the Statement of Additional Information (the “SAI”) for detail regarding the asset diversification requirements.
Portfolio Turnover Risk
Each of International Multifactor Fund’s, International AI Enhanced Value Fund's, New Economy Real Estate Fund's and Emerging Markets Multifactor Fund’s investment strategy may result in a high portfolio turnover rate. Higher portfolio turnover may result in the Fund paying higher levels of transaction costs and the distribution of additional capital gains, which generate greater tax liabilities for shareholders. These factors may negatively affect the Fund’s performance.
Sector Risks
Communication Services Sector Risk
The communication services sector consists of companies that facilitate communication and offer content and information through various types of media, such as telecom and media companies, and certain internet retailers and software companies. Telecom companies include wireless and fixed-line telecommunications service providers and companies that provide high-density data transmission services through high bandwidth or fiber-optic cable networks. Media companies include broadcasting corporations, cable and satellite companies, advertising and publishing companies, and movie and entertainment companies. Other companies in this sector either provide internet software and services, such as social media platforms, search engines, and on-line streaming services, or home entertainment software, such as video games and digital entertainment. The communication services sector is characterized by increasing competition and regulation by various regulatory authorities. Challenges facing companies in this sector include distressed cash flows due to the need to commit substantial capital to meet increasing competition, particularly in formulating new products and services using new technology, technological innovations that make existing products and services obsolete, and satisfying consumer demand. Further, while all companies are subject to cyber security threats, companies in the communication services sector may attract greater attention from hackers and be more susceptible to network security breaches and the theft of proprietary or customer information than other companies, which may have an adverse financial impact on companies in this sector.
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Consumer Discretionary Sector Risk
The consumer discretionary sector includes, for example, automobile, textile and retail companies, as well as hotels, restaurants and other leisure facilities. This sector can be significantly affected by, among other things, changes in domestic and international economies, exchange and interest rates, worldwide demand, supply chain constraints, competition, consumers’ disposable income levels, propensity to spend and consumer preferences, social trends, and marketing campaigns. Companies in the consumer discretionary sector have historically been characterized as relatively cyclical and therefore more volatile in times of change.
Consumer Staples Sector Risk
The consumer staples sector includes, for example, food and drug retail and companies whose primary lines of business are food, beverage and other household items, including agricultural products. This sector can be affected by, among other things, changes in price and availability of underlying commodities, rising energy prices and global economic conditions. Unlike the consumer discretionary sector, companies in the consumer staples sector have historically been characterized as non-cyclical in nature and therefore less volatile in times of change.
Energy Sector Risk
The energy sector includes, for example, companies engaged in exploration, production, refining, marketing, storage, and transportation of oil, gas, coal, and consumable fuels, as well as related equipment and services. The energy sector can be significantly affected by, among other things, worldwide economic growth, worldwide demand, political instability in the Middle East, eastern Europe or other oil or gas producing regions, and volatile oil prices. Securities’ prices for these types of companies are affected by supply and demand, exploration and production spending, world events and economic conditions, swift price and supply fluctuations, energy conservation, the success of exploration projects, exchange rates, interest rates, increased competition and technological advances, liabilities for environmental damage and general civil liabilities and tax and other governmental regulatory policies. Companies in this sector may be subject to substantial government regulation and contractual fixed pricing, which may increase the cost of doing business and limit these companies’ earnings. A significant portion of revenues of these companies depends on a relatively small number of customers, including governmental entities and utilities. As a result, governmental budget constraints may have a material adverse effect on the stock prices of companies in this sector. Energy companies may also operate in or engage in transactions involving countries with less developed regulatory regimes or a history of expropriation, nationalization or other adverse policies. As the demand for, or prices of, energy increase, the value of the Fund’s investments generally would be expected to also increase. Conversely, declines in the demand for, or prices of, energy generally would be expected to contribute to declines in the value of such securities. Such declines may occur quickly and without warning and may negatively impact the value of a Fund and your investment.
Financials Sector Risk
To the extent a Fund invests significantly in securities of, or financial instruments tied to the performance of, companies in the financials sector, it is subject to the risk that the financials sector will underperform the market as a whole due to adverse regulatory developments, market conditions or similar events affecting the financials sector. The financials sector includes companies involved in a wide variety of financial activities, including, for example, banking, consumer finance, asset management, investment banking and brokerage, insurance brokerage, reinsurance, residential and commercial mortgage servicing, and the operation of financial exchanges. Companies in the financials sector are subject to extensive government regulation and intervention, adverse market conditions, and increased competition, all of which may adversely affect the scope of their activities, the fees and interest rates they can charge, the amount of capital and liquid assets they must maintain, the financial commitments that they can make, profitability, and, potentially, their size. Adverse regulation or market conditions may affect the financials sector as a whole or specific industries or sub-industries within the financials sector. For example, the banking industry, a separate industry within the financials sector, was particularly affected by recent market conditions that contributed to the failure of multiple regional banks. In addition, the deterioration of particular segments of the market, such as the credit market, may have particularly far-reaching and adverse effects across the financials sector. Events affecting the financials sector in the recent past resulted in an unusually high degree of volatility in the financial markets, both domestic and foreign, and caused certain companies within the sector to incur large losses further exacerbating the adverse performance of the sector as a whole. The financials sector is also a target for cyberattacks. Cybersecurity incidents and technology malfunctions and failures have become increasingly frequent and have caused significant losses to companies in the financials sector.
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Health Care Sector Risk
The health care sector includes, for example, biotechnology, pharmaceutical, health care facilities, and health care equipment and supply companies. This sector can be significantly affected by, among other things, lapsing patent protection, technological developments that make drugs obsolete, government regulation, price controls, and approvals for drugs.
Industrials Sector Risk
The industrials sector includes, for example, aerospace and defense, non-residential construction, engineering, machinery, transportation, and commercial and professional services companies. This sector can be significantly affected by, among other things, business cycle fluctuations, worldwide economic growth, exchange rates, commodity prices, government and corporate spending, supply and demand for specific products and manufacturing, rapid technological developments, international political and economic developments, environmental issues, and tax and governmental regulatory policies. As the demand for, or prices of, industrials increase, the value of a Fund’s investments generally would be expected to also increase. Conversely, declines in the demand for, or prices of, industrials generally would be expected to contribute to declines in the value of such securities. Such declines may occur quickly and without warning and may negatively impact the value of a Fund and your investment.
Information Technology Sector Risk
The information technology sector includes, for example, companies that offer software and information technology services, manufacturers and distributors of technology hardware and equipment such as communications equipment, cellular phones, computers and peripherals, electronic equipment and related instruments, and semiconductors and related equipment and materials. This sector can be significantly affected by, among other things, the supply and demand for specific products and services, the pace of technological development, and government regulation. Challenges facing companies in the information technology sector include distressed cash flows due to the need to commit substantial capital to meet increasing competition, particularly in formulating new products and services using new technology, technological innovations that make existing products and services obsolete, and satisfying consumer demand.
Materials Sector Risk
The basic materials sector includes, for example, metals and mining, chemicals, construction materials, glass, paper and related packaging products and forest product companies. This sector can be significantly affected by, among other things, swift fluctuations in supply and demand for basic materials, commodity price volatility, world economic growth, depletion of natural resources and energy conservation, technological progress, and government regulations, including international political and economic developments, the environmental impact of energy and basic materials operations and tax and other governmental regulatory policies. As the demand for, or prices of, basic materials increase, the value of a Fund’s investments generally would be expected to also increase. Conversely, declines in the demand for, or prices of, basic materials generally would be expected to contribute to declines in the value of such securities. Such declines may occur quickly and without warning and may negatively impact the value of a Fund and your investment.
Real Estate Sector Risk
REITs invest substantially all of their assets in real estate, trade like stocks and may qualify for special tax considerations. Investments in REITs subject a Fund to risks associated with the direct ownership of real estate. Market conditions or events affecting the overall market for real estate and REITs, such as declining property values or rising interest rates, could have a negative impact on the real estate market and the value of REITs in general. The real estate sector also includes real estate management and development companies. As the demand for, or prices of, real estate increase, the value of a Fund’s investments generally would be expected to also increase. Conversely, declines in the demand for, or prices of, real estate generally would be expected to contribute to declines in the value of the real estate market and REITs. Such declines may occur quickly and without warning and may negatively impact the value of a Fund and your investment.
WisdomTree Trust Prospectus 191 |
Shares of the Funds May Trade at Prices Other Than NAV
As with all ETFs, Fund shares may be bought and sold in the secondary market at market prices. Although it is expected that the market price of the shares of a Fund will not materially differ from a Fund’s NAV, there may be times when the market price and the NAV vary significantly, including due to timing reasons, perceptions about the NAV, supply and demand of a Fund’s shares (including disruptions in the creation/redemption process), during periods of market volatility and/or other factors. Because securities held by the Funds trade on foreign exchanges that are closed when the Funds’ primary listing exchange is open, there are likely to be deviations between the current price of an underlying security and the security’s last quoted price from the closed foreign market. This may result in premiums and discounts that are greater than those experienced by domestic ETFs. Thus, you may pay more (or less) than NAV when you buy shares of a Fund in the secondary market, and you may receive more (or less) than NAV when you sell those shares in the secondary market. If an investor purchases Fund shares at a time when the market price is at a premium to the NAV of the Fund’s shares or sells at a time when the market price is at a discount to the NAV of the Fund’s shares, an investor may sustain losses. Additionally, in stressed market conditions, the market for the Fund’s shares may become less liquid in response to deteriorating liquidity in the markets for the Fund’s underlying portfolio holdings.
Stock Connect Risks
Quota limitations risk. Stock Connect is subject to daily quota limitations on investments, which may restrict the China ex-State-Owned Enterprises Fund’s ability to invest in China A-Shares through Stock Connect on a timely basis, and the Fund may not be able to effectively pursue its investment policies. In addition, an investor cannot purchase and sell the same security on the same trading day, which may restrict the Fund’s ability to invest in A-Shares through Stock Connect and to enter into or exit trades on a timely basis.
Suspension risk. SEHK, SSE and SZSE reserve the right to suspend trading if necessary to ensure an orderly and fair market and manage risks prudently which could adversely affect the Fund’s ability to access the PRC market.
Differences in trading day. Stock Connect only operates on days when both the PRC and Hong Kong markets are open for trading and when banks in both markets are open on the corresponding settlement days. So it is possible that there are occasions when it is a normal trading day for the PRC market but Hong Kong investors (such as the Fund) cannot carry out any China A-Shares trading. The Fund may be subject to a risk of price fluctuations in China A-Shares during the time when Stock Connect is not trading as a result.
Restrictions on selling imposed by front-end monitoring. PRC regulations require that before an investor sells any share, there should be sufficient shares in the account; otherwise SSE or SZSE will reject the sell order concerned. SEHK will carry out pre-trade checking on China A-Shares sell orders of its participants (i.e., the stock brokers) to ensure there is no over-selling.
Clearing settlement and custody risks. HKSCC and ChinaClear establish the clearing links and each is a participant of the other to facilitate clearing and settlement of cross-boundary trades. As the national central counterparty of the PRC’s securities market, ChinaClear operates a comprehensive network of clearing, settlement and stock holding infrastructure. ChinaClear has established a risk management framework and measures that are approved and supervised by the CSRC. The chances of a ChinaClear default are considered to be remote.
Should the remote event of a ChinaClear default occur and ChinaClear be declared as a defaulter, HKSCC will, in good faith, seek recovery of the outstanding stocks and monies from ChinaClear through available legal channels or through ChinaClear’s liquidation. In that event, the Fund may suffer a delay in the recovery process or may not be able to fully recover its losses from ChinaClear.
The China A-Shares traded through Stock Connect are issued in scriptless form, so investors, such as the Fund, will not hold any physical China A-Shares. Hong Kong and overseas investors, such as the Fund, who have acquired Mainland Securities through Northbound trading maintain the Mainland Securities with their brokers’ or custodians’ stock accounts with the Central Clearing and Settlement System operated by HKSCC for the clearing securities listed or traded on SEHK.
Nominee arrangements in holding China A-Shares. HKSCC is the “nominee holder” of the Mainland Securities acquired by overseas investors (including the Fund) through Stock Connect. The CSRC Stock Connect rules expressly provide that investors enjoy the rights and benefits of the Mainland Securities acquired through Stock Connect in accordance with applicable laws. The CSRC has clarified that (i) the concept of nominee shareholding is recognized in China, (ii) overseas investors shall hold Mainland Securities through HKSCC and are entitled to proprietary interests in such securities as shareholders, (iii) China law does not expressly provide for a beneficial owner under the nominee holding structure to bring legal proceedings, nor does it prohibit a beneficial owner from doing so, (iv) as long as certification issued by HKSCC is treated as lawful proof of a beneficial owner’s holding of Mainland Securities under the Hong Kong Special Administrative Region law, it would be fully respected by CSRC, and (v) as long as an overseas investor can provide evidential proof of direct interest as a beneficial owner, the investor may take legal actions in its own name in PRC courts. However, the courts in the PRC may consider that any nominee or custodian as registered holder of the Mainland Securities would have full ownership thereof, and even if the concept of beneficial owner is recognized under PRC law, those Mainland Securities would form part of the pool of assets of such entity available for distribution to creditors of such entities and/or that a beneficial owner may have no rights whatsoever in respect thereof. Consequently, neither a Fund nor its custodian can ensure that the Fund’s ownership of these securities or title thereto is assured.
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Under the rules of the Central Clearing and Settlement System operated by HKSCC for the clearing of securities listed or traded on SEHK, HKSCC as nominee holder shall have no obligation to take any legal action or court proceeding to enforce any rights on behalf of the investors in respect of the Mainland Securities in the PRC or elsewhere. Therefore, although the Fund’s ownership may be ultimately recognized and the HKSCC confirmed that it is prepared to provide assistance to the beneficial owners of Mainland Securities where necessary, the Fund may suffer difficulties or delays in enforcing its rights in China A-Shares. Moreover, whether PRC courts will accept the legal action independently initiated by the overseas investor with the certification of holding Mainland Securities issued by HKSCC has yet to be tested. To the extent that HKSCC is deemed to be performing safekeeping functions with respect to assets held through it, it should be noted that a Fund and its custodian will have no legal relationship with HKSCC and no direct legal recourse against HKSCC in the event that the Fund suffers losses resulting from the performance or insolvency of HKSCC.
China A-Share market suspension risks. Only certain A-Shares are eligible to be accessed through Stock Connect. Such securities may lose their eligibility at any time, in which case they could be sold but could no longer be purchased through Stock Connect. China A-Shares may only be bought or sold where the relevant A-Shares are traded on the SSE or the SZSE, as appropriate. Given that the A-Share market is considered volatile and unstable (with the risk of suspension of a particular stock, and/or the whole market, and/or government intervention), the subscription and redemption of shares may also be disrupted. An Authorized Participant is unlikely to redeem or subscribe shares if it considers that A-Shares may not be available.
Investor compensation. The Fund will not benefit from the China Securities Investor Protection Fund in mainland China. The China Securities Investor Protection Fund is established to pay compensation to investors in the event that a securities company in mainland China is subject to compulsory regulatory measures (such as dissolution, closure, bankruptcy, and administrative takeover by the China Securities Regulatory Commission). Since the Fund is carrying out trading of China A-Shares through securities brokers in Hong Kong, but not mainland China brokers, therefore, it is not protected by the China Securities Investor Protection Fund. That said, if the Fund suffers losses due to default matters of its securities brokers in Hong Kong in relation to the investment of China A-Shares through Stock Connect, it would be compensated by Hong Kong’s Investor Compensation Fund.
Trading costs. In addition to paying trading fees and stamp duties in connection with China A-Share trading, the Fund may be subject to new portfolio fees, dividend tax and tax concerned with income arising from stock transfers which are yet to be determined by the relevant authorities.
Operational risk. Stock Connect provides a new channel for investors from Hong Kong and overseas, such as the Fund, to access the China stock market directly. Stock Connect is premised on the functioning of the operational systems of the relevant market participants. Market participants are able to participate in this program subject to meeting certain information technology capability, risk management and other requirements as may be specified by the relevant exchange and/or clearing house.
The securities regimes and legal systems of the two markets differ significantly and in order for the trial program to operate, market participants may need to address issues arising from the differences on an on-going basis. Further, the “connectivity” in Stock Connect program requires routing of orders across the border. This has and will continue to require the development of new information technology systems on the part of the SEHK and exchange participants. There is no assurance that the systems of the SEHK and market participants will function properly or will continue to be adapted to changes and developments in both markets. In the event that the relevant systems failed to function properly, trading in both markets through the program could be disrupted. The Fund’s ability to access the China A-Share market (and hence to pursue their investment strategy) will be adversely affected.
Regulatory risk. The CSRC Stock Connect rules are departmental regulations having legal effect in the PRC. However, the application of such rules is untested, and there is no assurance that PRC courts will recognize such rules, e.g., in liquidation proceedings of PRC companies.
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Stock Connect is novel in nature and is subject to regulations promulgated by regulatory authorities and implementation rules made by the stock exchanges in the PRC and Hong Kong. Further, new regulations may be promulgated from time to time by the regulators in connection with operations and cross-border legal enforcement in connection with cross-border trades through Stock Connect.
The regulations are untested so far and there is no certainty as to how they will be applied. Moreover, the current regulations are subject to change. There can be no assurance that Stock Connect will not be abolished. The Fund, which may invest in the PRC markets through Stock Connect, may be adversely affected as a result of such changes.
Subsidiary Investment Risk
The India Earnings Fund currently invests in its WisdomTree Subsidiary to gain exposure to Indian equity securities. The WisdomTree Subsidiary is not a registered investment company under the Investment Company Act of 1940 (the “1940 Act”). Because the WisdomTree Subsidiary is not directly subject to all of the investment protections of the 1940 Act, the India Earnings Fund may not have all of the protections offered to shareholders of registered investment companies. The India Earnings Fund’s Board of Trustees has oversight responsibility for the investment activities of the India Earnings Fund, including its investment in the WisdomTree Subsidiary. The India Earnings Fund is exposed to the risks of the WisdomTree Subsidiary, which is exposed to the risks of investing in Indian securities, as well as the risks of operating as an offshore investment vehicle organized in and subject to the laws of the Republic of Mauritius. Changes in the laws of the United States, India and/or the Republic of Mauritius could result in the inability of the India Earnings Fund, the WisdomTree Subsidiary, or both, to operate as intended, which could result in losses to the India Earnings Fund and its shareholders.
Tax Risk in China
Uncertainties in PRC tax rules governing taxation of income and gains from investments in A-Shares could result in unexpected tax liabilities for the China ex-State-Owned Enterprises Fund. The Fund’s investments in securities, including A-Shares, issued by PRC companies may cause the Fund to become subject to withholding and other taxes imposed by the PRC.
If the Fund were considered to be a tax resident of the PRC, it would be subject to PRC corporate income tax at the rate of 25% on its worldwide taxable income. If the Fund were considered to be a non-resident enterprise with a “permanent establishment” in the PRC, it would be subject to PRC corporate income tax of 25% on the profits attributable to the permanent establishment. The Adviser and Sub-Adviser intend to operate the Fund in a manner that will prevent it from being treated as a tax resident of the PRC and from having a permanent establishment in the PRC. It is possible, however, that the PRC could disagree with that conclusion or that changes in PRC tax law could affect the PRC corporate income tax status of the Fund.
The PRC generally imposes withholding income tax at a rate of 10% on dividends, premiums, interest and capital gains originating in the PRC and paid to a company that is not a resident of the PRC for tax purposes and that has no permanent establishment in China. The withholding is in general made by the relevant PRC tax resident company making such payments. In the event the relevant PRC tax resident company fails to withhold the relevant PRC withholding income tax or otherwise fails to pay the relevant withholding income tax to the PRC tax authorities, the competent PRC tax authorities may, at their sole discretion, impose tax obligations on the Fund.
The Ministry of Finance of the PRC, the State Administration of Taxation of the PRC and the CSRC (collectively, the “PRC Tax Authorities”) issued the “Notice on the Pilot Program of Shanghai-Hong Kong Stock Connect” Caishui [2014] No.81 (Notice 81), on October 31, 2014, which states that the capital gain from disposal of A-Shares by foreign investors enterprises via the Shanghai-Hong Kong Stock Connect program will be temporarily exempt from withholding income tax. Notice 81 also states that the dividends derived from A-Shares by foreign investor enterprises is subject to 10% withholding income tax.
The PRC Tax Authorities issued the “Notice on the Pilot Program of Shenzhen-Hong Kong Stock Connect” Caishui [2016] No.127 (Notice 127)” on November 5, 2016, which states that the capital gain from disposal of A-Shares by foreign investors enterprises via the Shenzhen-Hong Kong Stock Connect program will be temporarily exempt from withholding income tax. Notice 127 also states that the dividends derived from A-Shares by foreign investor enterprises is subject to 10% withholding income tax.
There is no indication of how long the temporary exemption will remain in effect and the Fund may be subject to such withholding income tax in the future. If, in the future, China begins applying tax rules regarding the taxation of income from investments through Stock Connect and/or begins collecting capital gains taxes on such investments, the Fund could be subject to withholding income tax liability if the Fund determines that such liability cannot be reduced or eliminated by applicable tax treaties. The PRC Tax Authorities may, in the future, issue further guidance in this regard and with potential retrospective effect. The negative impact of any such tax liability on the Fund’s return could be substantial.
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In light of the uncertainty as to how gains or income that may be derived from the Fund’s investments in the PRC will be taxed, the Fund reserves the right to provide for withholding tax on such gains or income and withhold tax for the account of the Fund. Withholding tax may already be withheld at a broker/custodian level. If the Fund expects such withholding tax on trading in A-Shares to be imposed, it reserves the right to establish a reserve for such tax. If the Fund establishes such a reserve but is not ultimately subject to the tax, shareholders who redeemed or sold their shares while the reserve was in place will effectively bear the tax and may not benefit from the later release, if any, of the reserve. Conversely, if the Fund does not establish such a reserve but ultimately is subject to the tax, shareholders who redeemed or sold their shares prior to the tax being withheld, reserved or paid will have effectively avoided the tax, even if they benefited from the trading that precipitated the Fund’s payment of it. Investors should note that such provision may be excessive or inadequate to meet actual withholding tax liabilities (which could include interest and penalties) on the Fund’s investments. As a result, investors may be advantaged or disadvantaged depending on the final rules of the relevant PRC tax authorities.
Any tax provision, if made, will be reflected in the NAV of the Fund at the time of debit or release of such provision and thus will impact shares which remain in the Fund at the time of debit or release of such provision. If the actual applicable tax levied by PRC tax authorities is greater than that provided for by the Fund so that there is a shortfall in the tax provision amount, investors should note that the NAV of the Fund may suffer more than the tax provision amount as the Fund will ultimately have to bear the additional tax liabilities. In this case, the then-existing and subsequent investors will be disadvantaged. On the other hand, if the actual applicable tax levied by PRC tax authorities is less than that provided for by the Fund so that there is an excess in the tax provision amount, investors who have redeemed Fund shares before the PRC tax authorities’ ruling, decision or guidance in this respect will be disadvantaged as they would have borne the loss from the Fund’s overprovision. In this case, the then-existing and subsequent investors may benefit if the difference between the tax provision and the actual taxation liability can be returned to the account of the Fund as assets thereof. In case of having excess in the tax provision amount (for example, the actual applicable tax levied by PRC tax authorities is less than the tax provision amount or due to a change in provisioning by the Fund), such excess shall be treated as property of the Fund and investors who have already transferred or redeemed their shares in the Fund will not be entitled or have any right to claim any part of the amount representing the excess.
Stamp duty under the PRC laws generally applies to the execution and receipt of taxable documents, which include contracts for the sale of A-Shares traded on PRC stock exchanges. In the case of such contracts, the stamp duty is currently imposed on the seller but not on the purchaser, at the rate of 0.1%. While overseas investors currently are exempt from value added taxes (currently at the rate of 6%) on capital gains derived from trading of A-Shares through Stock Connect, the PRC tax rules could be changed which could result in unexpected tax liabilities for the Fund. In addition, urban maintenance and construction tax (currently at rates ranging from 1% to 7%), educational surcharge (currently at the rate of 3%) and local educational surcharge (currently at the rate of 2%) (collectively, the “surtaxes”) are imposed based on value added tax liabilities, so if the Fund were liable for value added tax it would also be required to pay the applicable surtaxes.
The PRC rules for taxation of Stock Connect are evolving and certain of the tax regulations to be issued by the PRC State Administration of Taxation and/or PRC SAFE to clarify the subject matter may apply retrospectively, even if such rules are adverse to the Fund and its investors. The imposition of such taxes, particularly on a retrospective basis, could have a material adverse effect on the Fund’s returns. Before further guidance is issued and is well established in the administrative practice of the PRC tax authorities, the practices of the PRC tax authorities that collect PRC taxes relevant to the Fund may differ from, or be applied in a manner inconsistent with, the practices with respect to the analogous investments described herein or any further guidance that may be issued. The value of the Fund’s investment in the PRC and the amount of its income and gains could be adversely affected by an increase in tax rates or change in the taxation basis.
The above information is only a general summary of the potential PRC tax consequences that may be imposed on the Fund and its investors either directly or indirectly and should not be taken as a definitive, authoritative or comprehensive statement of the relevant matter. Investors should seek their own tax advice on their tax position with regard to their investment in the Fund.
The PRC government has implemented a number of tax reform policies in recent years. The current tax laws and regulations may be revised or amended in the future. Any revision or amendment in tax laws and regulations may affect the after-taxation profit of PRC companies and foreign investors in such companies, such as the Fund.
WisdomTree Trust Prospectus 195 |
Tax Risk in India
The Double Taxation Avoidance Agreement between India and Mauritius (“tax treaty”) has recently been re-negotiated by way of a protocol (“2016 Protocol”). Under the 2016 Protocol, purchases of Indian shares by Mauritius entities, made on or after April 1, 2017, will be subject to capital gains tax in India. The 2016 Protocol in its applicability to the India Earnings Fund or the WisdomTree Subsidiary, or in the requirements established by Mauritius to qualify as a Mauritius resident, could result in the imposition of various taxes on the WisdomTree Subsidiary or the India Earnings Fund by India, which could reduce the return to the India Earnings Fund on its investments.
Additional Non-Principal Risk Information
Trading. Although each Fund’s shares are listed for trading on NYSE Arca, Inc., NASDAQ or Cboe BZX Exchange, Inc. (each, a “Listing Exchange”) and may be listed or traded on U.S. and non-U.S. stock exchanges other than the Listing Exchange, there can be no assurance that an active trading market for such shares will develop or be maintained. The trading market in a Fund’s shares may become less liquid in response to deteriorating liquidity in the markets for a Fund’s holdings or due to irregular trading activity in the markets. Trading in shares may be halted due to market conditions or for reasons that, in the view of the Listing Exchange, make trading in shares inadvisable. In addition, trading in shares on the Listing Exchange is subject to trading halts caused by extraordinary market volatility pursuant to Listing Exchange “circuit breaker” rules. There can be no assurance that the requirements of the Listing Exchange necessary to maintain the listing of a Fund will continue to be met or will remain unchanged or that Fund shares will trade with any volume, or at all, on any stock exchange.
Costs of Buying or Selling Shares. Investors buying or selling Fund shares in the secondary market will pay brokerage commissions or other charges imposed by brokers, as determined by that broker. Brokerage commissions are often a fixed amount and may be a significant proportional cost for investors seeking to buy or sell relatively small amounts of Fund shares. In addition, secondary market investors also will incur the cost of the difference between the price that an investor is willing to buy shares (the “bid” price) and the price at which an investor is willing to sell shares (the “ask” price). This difference in bid and ask prices is often referred to as the “spread” or “bid/ask spread.” The bid/ask spread varies over time for shares based on trading volume and market liquidity (including for the underlying securities held by a Fund), and is generally lower if a Fund’s shares have more trading volume and market liquidity and higher if a Fund’s shares have little trading volume and market liquidity. Further, a relatively small investor base in a Fund, asset swings in a Fund and/or increased market volatility may cause increased bid/ask spreads. Shares of the Funds, similar to shares of other issuers listed on a stock exchange, may be sold short and are therefore subject to the risk of increased volatility associated with short selling. Due to the costs of buying or selling Fund shares, including bid/ask spreads, frequent trading of Fund shares may significantly reduce investment results and an investment in shares may not be advisable for investors who anticipate regularly making small investments.
Securities Lending. Although the Funds are indemnified by the Funds' lending agent for losses incurred in connection with a borrower’s default with respect to a loan, the Funds bear the risk of loss of investing cash collateral and may be required to make payments to a borrower upon return of loaned securities if invested collateral has declined in value. Furthermore, because of the risks in delay of recovery, a Fund may lose the opportunity to sell the securities at a desirable price, and the Fund will generally not have the right to vote securities while they are being loaned. These events could also trigger negative tax consequences for a Fund.
Authorized Participants, Market Makers and Liquidity Providers Concentration Risk. The Funds have a limited number of financial institutions that may act as Authorized Participants. In addition, there may be a limited number of market makers and/or liquidity providers in the marketplace. To the extent either of the following events occur, Fund shares may trade at a prolonged and material premium or discount to NAV (or not trade at all) and possibly face trading halts and/or delisting: (i) Authorized Participants exit the business, have a business disruption (including through the types of disruptions described under “Cybersecurity Risk” and “Operational Risk”) or otherwise become unable or unwilling to process creation and/or redemption orders and no other Authorized Participants step forward to perform these services, or (ii) market makers and/or liquidity providers exit the business, have a business disruption (including through the types of disruptions described under “Cybersecurity Risk” and “Operational Risk”) or significantly reduce their business activities and no other entities step forward to perform their functions.
This risk may be heightened for Funds that invest in markets that require foreign securities settlement and/or because Authorized Participants may be required to post collateral in relation to securities settlement, which only certain Authorized Participants may be able to do.
196 WisdomTree Trust Prospectus |
Operational Risk. The Funds and their service providers, including the Adviser, each Sub-Adviser, administrator, custodian, and transfer agent, may experience disruptions that arise from human error, processing and communications errors, counterparty or third-party errors, technology or systems failures, any of which may have an adverse impact on the Funds. Although the Funds and their service providers seek to mitigate these operational risks through their internal controls and operational risk management processes, these measures may not identify or may be inadequate to address all such risks.
Portfolio Holdings Information
Information about each Fund’s daily portfolio holdings, including the identities and quantities of such portfolio holdings, is available at www.wisdomtree.com/investments. In addition, each Fund discloses its complete portfolio holdings as of the end of its fiscal year (March 31) and its second fiscal quarter (September 30) in its reports to shareholders. Each Fund files its complete portfolio holdings as of the end of its first and third fiscal quarters June 30 and December 31, respectively) with the SEC in Part F of Form N-PORT no later than 60 days after the relevant fiscal period. You can find the SEC filings on the SEC’s website, www.sec.gov, or by calling WisdomTree Trust at 1-866-909-WISE (9473). A summarized description of each Fund’s policies and procedures with respect to the disclosure of each Fund’s portfolio holdings is available in the SAI.
Management
Investment Adviser
As the investment adviser, WisdomTree Asset Management has overall responsibility for the general management and administration of the WisdomTree Trust (the “Trust”) and each of its separate investment portfolios called “Funds.” WisdomTree Asset Management is a registered investment adviser with offices located at 250 West 34th Street, 3rd Floor, New York, New York 10119, and is a leader in ETF management. As of June 30, 2023, WisdomTree Asset Management had assets under management totaling approximately $65.9 billion. WisdomTree, Inc. (“WisdomTree”)* is the parent company of WisdomTree Asset Management. WisdomTree Asset Management provides an investment program for each Fund. The Adviser provides proactive oversight of the Sub-Adviser, defined below, daily monitoring of the Sub-Adviser’s buying and selling of securities for each Fund, and regular review of the Sub-Adviser’s performance. In addition, the Adviser arranges for sub-advisory, transfer agency, custody, fund administration, securities lending, and all other non-distribution related services necessary for the Funds to operate.
* “WisdomTree” is a registered mark of WisdomTree and has been licensed for use by the Trust.
For the fiscal year or period ended March 31, 2023, the Funds paid advisory fees to the Adviser, as a percentage of average daily net assets, in the amounts listed below.
Name of Fund | Management Fee |
International Equity Fund | 0.48% |
International High Dividend Fund | 0.58% |
International LargeCap Dividend Fund | 0.48% |
International MidCap Dividend Fund | 0.58% |
International SmallCap Dividend Fund | 0.58% |
International AI Enhanced Value Fund | 0.58% |
International Quality Dividend Growth Fund | 0.42% |
International Multifactor Fund | 0.38% |
Europe Quality Dividend Growth Fund | 0.58% |
Europe SmallCap Dividend Fund | 0.58% |
Japan SmallCap Dividend Fund | 0.58% |
Japan Hedged Equity Fund | 0.48% |
Japan Hedged SmallCap Equity Fund | 0.58% |
Europe Hedged Equity Fund | 0.58% |
Europe Hedged SmallCap Equity Fund | 0.58% |
International Hedged Quality Dividend Growth Fund | 0.58% |
Global High Dividend Fund | 0.58% |
WisdomTree Trust Prospectus 197 |
Name of Fund | Management Fee |
Global ex-U.S. Quality Dividend Growth Fund | 0.42% |
New Economy Real Estate Fund | 0.58% |
Emerging Markets High Dividend Fund | 0.63% |
Emerging Markets SmallCap Dividend Fund | 0.58% |
Emerging Markets Quality Dividend Growth Fund | 0.32% |
Emerging Markets Multifactor Fund | 0.48% |
Emerging Markets ex-State-Owned Enterprises Fund | 0.32% |
India Earnings Fund | 0.83% |
China ex-State-Owned Enterprises Fund | 0.32% |
Under the Investment Advisory Agreement for each Fund, WisdomTree Asset Management has agreed to pay generally all expenses of each Fund, subject to certain exceptions. For a detailed description of the Investment Advisory Agreement for each Fund, please see the “Management of the Trust” section of the SAI. Pursuant to a separate contractual arrangement, WisdomTree Asset Management arranges for the provision of chief compliance officer (“CCO”) services with respect to each Fund, and is liable and responsible for, and administers, payments to the CCO, the Independent Trustees and counsel to the Independent Trustees. WisdomTree Asset Management receives a fee of up to 0.0044% of each Fund’s average daily net assets for providing such services and paying such expenses. WisdomTree Asset Management provides CCO services to the Trust.
The basis
for the Board of Trustees’ approval of the Advisory Agreements for each Fund is
available in the Trust’s Semi-Annual Report to Shareholders for the period ended
September 30, 2022.
Sub-Advisers
Mellon Investments Corporation (“Mellon”): Mellon is responsible for the day-to-day management of each Fund, except for the International AI Enhanced Value Fund. Mellon, a registered investment adviser, is a leading innovator in the investment industry and manages global quantitative-based investment strategies for institutional and private investors. Its principal office is located at One Boston Place, 201 Washington Street, Boston, Massachusetts 02108. As of June 30, 2023, Mellon had assets under management totaling approximately $809 billion. Mellon is an independently operated indirect subsidiary of The Bank of New York Mellon Corporation, a publicly traded financial holding company. Mellon chooses each Fund’s portfolio investments and places orders to buy and sell the portfolio investments. WisdomTree Asset Management pays Mellon for providing sub-advisory services to each of the Funds sub-advised by Mellon.
Voya Investment Management Co., LLC (“Voya IM”): Voya IM is responsible for the day-to-day management of the International AI Enhanced Value Fund. Voya IM, a registered investment adviser, is a leading innovator in the investment industry and manages global quantitative-based investment strategies for institutional and private investors. Its principal office is located at 230 Park Avenue, New York, New York 10169. As of June 30, 2023, Voya IM had assets under management totaling approximately $323 billion.1 The Sub-Adviser is a wholly-owned indirect subsidiary of Voya Financial, Inc., a publicly traded financial holding company. Voya IM chooses the portfolio investments of the Fund and places orders to buy and sell the portfolio investments. WisdomTree Asset Management pays Voya IM for providing sub-advisory services to the Fund.
All Funds. The basis for the Board of Trustees’ approval of the Sub-Advisory Agreements for each Fund is available in the Trust’s Semi-Annual Report to Shareholders for the period ended September 30, 2022.
WisdomTree Asset Management, as the investment adviser for the Funds, may hire one or more sub-advisers to oversee the day-to-day activities of the Funds. The sub-advisers are subject to oversight by WisdomTree Asset Management. WisdomTree Asset Management and the Trust have received an exemptive order from the SEC that permits WisdomTree Asset Management, with the approval of the Independent Trustees of the Trust, to retain unaffiliated investment sub-advisers for each Fund, without submitting the sub-advisory agreement to a vote of the Fund’s shareholders. The Trust will notify shareholders in the event of any change in the identity of such sub-adviser or sub-advisers. WisdomTree Asset Management has ultimate responsibility for the investment performance of the Funds due to its responsibility to oversee each sub-adviser and recommend their hiring, termination and replacement. WisdomTree Asset Management is not required to disclose fees paid to any sub-adviser retained pursuant to the order.
1 As of 06/30/23. Voya IM assets are calculated on a market value basis and include proprietary insurance general account assets of $34 billion.
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Portfolio Managers
Mellon
Each Mellon Fund is managed by Mellon’s Equity Index Strategies portfolio management team. The individual members of the team jointly and primarily responsible for the day-to-day management of the Funds’ portfolios are described below.
Marlene Walker-Smith, a Director, Head of Equity Index Portfolio Management, has been with Mellon since 1995. Ms. Walker-Smith leads a team of portfolio managers covering domestic and international index portfolios, as well as corporate actions. Previously, she served as an equity index portfolio manager and equity trader for Mellon. Prior to joining the firm, Ms. Walker-Smith was a trader for Banc One Investment Advisors Corporation and a brokerage services manager for Mid Atlantic Capital Corporation. She has been in the investment industry since 1990. Ms. Walker-Smith earned an MBA in finance from the University of Pittsburgh and a BA in history and Russian from Washington & Jefferson College.
David France, CFA, a Vice President, has been with Mellon since 2009. Mr. France is a senior portfolio manager and team manager in the equity index portfolio management group. He manages and leads a team of portfolio managers responsible for US and non-US equity index portfolios. Prior to joining the firm, he was an investment advisor with PNC Wealth Management. Previously, he worked as an investment analyst with Greycourt, an independent advisory firm serving wealthy families and foundations, and before that he held various fixed income and equity support positions at T. Rowe Price. He has been in the investment industry since 1995. Mr. France earned an MS in finance from Loyola University Maryland and a BSBA in accounting from Duquesne University. He holds the CFA® designation and is a member of CFA Institute and CFA Society Pittsburgh.
Todd Frysinger, CFA, a Vice President, has been with Mellon since 2007. Mr. Frysinger is a senior portfolio manager and team manager in the equity index portfolio management group. He manages and leads a team of portfolio managers responsible for US and non-US equity index portfolios. Prior to joining the firm, Mr. Frysinger served as assistant portfolio manager for Mellon Financial Corporation’s Corporate Treasury group, managing fixed income investment portfolios. He has been in the investment industry since 1996. Mr. Frysinger earned an MS in finance from Boston College and a BS in finance and management from Elizabethtown College. He holds the CFA® designation and is a member of CFA Institute and CFA Society Pittsburgh.
Vlasta Sheremeta, CFA, a Vice President, has been with Mellon since 2011. Ms. Sheremeta is a senior portfolio manager and team manager in the equity index portfolio management group. She manages and leads a team of portfolio managers responsible for US and non-US equity index portfolios. Prior to joining the firm, she provided trade execution support to the FX trading desk at BNY Mellon. She has been in the investment industry since 2010. Ms. Sheremeta earned an MBA from Carnegie Mellon University and a BS in business administration from the University of Pittsburgh. She holds the CFA® designation and is a member of the CFA Institute and the CFA Society of Pittsburgh.
Michael Stoll, a Vice President, has been with Mellon since 2005. Mr. Stoll is a senior portfolio manager and team manager in equity index portfolio management group. He manages and leads a team of portfolio managers responsible for US and non-US equity index portfolios. Prior to joining the firm, he was a senior manager in consulting engineering at Northgate Environmental Management. He has been in the investment industry since 2005. Mr. Stoll earned an MBA and an MS in geotechnical engineering from the University of California at Berkeley and a BS in civil engineering from the University of California at Irvine.
Voya IM
International AI Enhanced Value Fund
The Fund is managed by Voya IM’s Quantitative Equities Portfolio Management team. The individual members of the team jointly and primarily responsible for the day-to-day management of the Fund’s portfolio are described below.
Vincent Costa is Chief Investment Officer, Equities, at Voya IM. He is also the Head of the Global Quantitative Equity Team and serves as a portfolio manager for the active quantitative and fundamental large cap value strategies. Previously at Voya IM, he was the Head of Portfolio Management for Quantitative Equity. Prior to joining Voya IM, he managed quantitative equity investments at both Merrill Lynch Investment Management and Bankers Trust Company. Mr. Costa earned an MBA in finance from New York University’s Stern School of Business and a BS in quantitative business analysis from Pennsylvania State University, and he is a CFA® Charterholder.
WisdomTree Trust Prospectus 199 |
Russell Shtern is a Portfolio Manager – Machine Intelligence at Voya IM. Prior to joining Voya IM, he was a senior portfolio manager for Franklin Templeton Investment Solutions group from October of 2020. Mr. Shtern was responsible for managing smart beta and active multi-factor equity strategies. Prior to Franklin Templeton, he was head of equity portfolio management and trading and a member of the global equity management team for QS Investors (Legg Mason affiliate), a quantitative multi-asset and equity manager. Before joining QS Investors in 2010, Mr. Shtern was a member of its predecessor, Deutsche Asset Management Quantitative Strategies group, where he served as a lead portfolio manager for Diversification Based Investing Equity and Tax Managed Equity strategies. Prior to this, he spent 3 years at Deutsche Bank Securities supporting equity derivatives and global program trading efforts. Mr. Shtern holds a bachelor of business administration with honors from Pace University, with a concentration in finance and a minor in economics. He also holds the CFA® designation.
The Funds’ SAI provides additional information about the Portfolio Managers’ compensation, other accounts managed by the Portfolio Managers, and the Portfolio Managers’ ownership of shares in the Funds.
Additional Information on Buying and Selling Fund Shares
Most investors will buy and sell shares of the Funds in secondary market transactions through broker-dealers at market prices. Shares of the Funds trade on the Listing Exchange and elsewhere during the trading day and can be bought and sold throughout the trading day like other shares of publicly traded securities. When buying or selling shares through a broker, most investors will incur customary brokerage commissions and charges and you may pay some or all of the spread between the bid and the offered prices in the secondary market for shares. Shares of the Funds trade under the trading symbols listed on the cover of this Prospectus.
Share Trading Prices
Transactions in Fund shares will be priced at NAV only if you are an institutional investor (e.g., broker-dealer) that has signed an agreement with the Distributor (as defined below) and you thereafter purchase or redeem shares directly from a Fund in Creation Units. As with other types of securities, the trading prices of shares in the secondary market can be affected by market forces such as supply and demand, economic conditions and other factors. The price you pay or receive when you buy or sell your shares in the secondary market may be more or less than the NAV of such shares.
Determination of Net Asset Value
The NAV of each Fund’s shares is calculated each day the national securities exchanges are open for trading as of the close of regular trading on the Listing Exchange, generally 4:00 p.m. New York time (the “NAV Calculation Time”). NAV per share is calculated by dividing a Fund’s net assets by the number of Fund shares outstanding.
In calculating its NAV, a Fund generally values: (i) equity securities (including preferred stock) traded on any recognized U.S. or non-U.S. exchange at the last sale price or official closing price on the exchange or system on which they are principally traded; (ii) unlisted equity securities (including preferred stock) at the last quoted sale price or, if no sale price is available, at the mean between the highest bid and lowest ask price; and (iii) fixed income securities at current market quotations or mean prices obtained from broker-dealers or independent pricing service providers. In addition, a Fund may invest in money market funds which are valued at their NAV per share and affiliated ETFs which are valued at their last sale or official closing price on the exchange on which they are principally traded or at their NAV per share in instances where the affiliated ETF has not traded on its principal exchange.
Pursuant to Board-approved valuation procedures established by the Trust and the Adviser, the Board has appointed the Adviser as each Fund’s valuation designee (the “Valuation Designee”) to perform all fair valuations of the Funds’ portfolio investments, subject to the Board’s oversight. As the Valuation Designee, the Adviser has established procedures for its fair valuation of each Fund’s portfolio investments. These procedures address, among other things, determining when market quotations are not readily available or reliable and the methodologies to be used for determining the fair value of investments, as well as the use and oversight of third-party pricing services for fair valuation.
200 WisdomTree Trust Prospectus |
Fair value pricing is used by the Valuation Designee when reliable market quotations are not readily available or are not deemed to reflect current market values and when the instrument to be priced is not a security. Securities that may be valued using “fair value” pricing may include, but are not limited to, securities for which there are no current market quotations or whose issuer is in default or bankruptcy, securities subject to corporate actions (such as mergers or reorganizations), securities subject to non-U.S. investment limits or currency controls, and securities affected by “significant events.” An example of a significant event is an event occurring after the close of the market in which a security trades but before a Fund’s next NAV Calculation Time that may materially affect the value of the Fund’s investment (e.g., government action, natural disaster, or significant market fluctuation). When fair value pricing is employed by the Valuation Designee, the prices of securities used by a Fund to calculate its NAV may differ from quoted or published prices for the same securities.
Dividends and Distributions
The Funds intend to pay out dividends on a quarterly basis. Nonetheless, a Fund may not make a dividend payment every quarter.
Each Fund intends to distribute its net realized capital gains to investors annually. The Funds occasionally may be required to make supplemental distributions at some other time during the year. Distributions in cash may be reinvested automatically in additional whole shares only if the broker through whom you purchased shares makes such option available. Your broker is responsible for distributing the income and capital gain distributions to you.
Book Entry
Shares of the Funds are held in book-entry form, which means that no stock certificates are issued. The Depository Trust Company (“DTC”) or its nominee is the record owner of all outstanding shares of each Fund.
Investors owning shares of the Funds are beneficial owners as shown on the records of DTC or its participants. DTC serves as the securities depository for all shares of the Funds. Participants include DTC, securities brokers and dealers, banks, trust companies, clearing corporations, and other institutions that directly or indirectly maintain a custodial relationship with DTC. As a beneficial owner of shares, you are not entitled to receive physical delivery of stock certificates or to have shares registered in your name, and you are not considered a registered owner of shares. Therefore, to exercise any right as an owner of shares, you must rely upon the procedures of DTC and its participants. These procedures are the same as those that apply to any securities that you hold in book-entry or “street name” form. Your broker will provide you with account statements, confirmations of your purchases and sales, and tax information.
Delivery of Shareholder Documents – Householding
Householding is an option available to certain investors of the Funds. Householding is a method of delivery, based on the preference of the individual investor, in which a single copy of certain shareholder documents can be delivered to investors who share the same address, even if their accounts are registered under different names. Householding for the Funds is available through certain broker-dealers. If you are interested in enrolling in householding and receiving a single copy of prospectuses and other shareholder documents, please contact your broker-dealer. If you are currently enrolled in householding and wish to change your householding status, please contact your broker-dealer.
Frequent Purchases and Redemptions of Fund Shares
The Funds have adopted policies and procedures with respect to frequent purchases and redemptions of Creation Units of Fund shares. Only Authorized Participants are authorized to purchase and redeem shares directly from the Funds, and their purchase and redemption transactions are essential to the operation of the Funds. In addition to helping to ensure there is an adequate supply of Fund shares to meet secondary market trading demand, Authorized Participants’ purchase and redemption transactions also generally help to keep the trading prices of the Funds’ shares in line with their NAV per share. Moreover, many of the Funds transact with Authorized Participants on an in-kind basis. In-kind purchase and redemption transactions generally do not give rise to the adverse consequences commonly associated with frequent purchases and redemptions of fund shares because they do not require a fund to sell portfolio holdings to raise cash to meet redemptions, which may increase portfolio transaction costs and potentially result in adverse tax consequences, such as the realization of capital gains, or to hold a significant amount of cash to meet redemptions or while awaiting investment opportunities to invest share purchase proceeds, which can lead to increased tracking error or reduced returns. Accordingly, it is the policy of each Fund to accommodate frequent purchases and redemptions of Fund shares by Authorized Participants. To mitigate any adverse consequences of frequent purchases and redemptions, particularly for those Funds that transact with Authorized Participants on a cash-basis, the Funds employ fair value pricing and may impose transaction fees on purchases and redemptions of Creation Units to cover the costs incurred by the Funds in executing such trades. In addition, each Fund reserves the right to impose restrictions on disruptive, excessive, or short-term trading as well as to reject any purchase order at any time.
WisdomTree Trust Prospectus 201 |
Investments by Investment Companies
Section 12(d)(1) of the 1940 Act restricts investments by investment companies in the securities of other investment companies, including shares of each Fund. Registered investment companies are permitted to invest in another registered investment company, an acquired fund, beyond the limits set forth in Section 12(d)(1) of the 1940 Act subject to certain terms and conditions set forth in Rule 12d1-4 under the 1940 Act, including that such registered investment companies enter into an agreement with the acquired fund setting forth the material terms of investment in the acquired fund. However, registered investment companies generally may not rely on Rule 12d1-4 to invest in an acquired fund beyond the limits set forth in Section 12(d)(1) if the acquired fund also invests significantly in other investment companies in reliance on and compliance with the conditions set forth in Rule 12d1-4. To the extent a Fund invests in other ETFs to a significant extent, other investment companies will not be permitted to invest in these Funds beyond the Section 12(d)(1) limits in reliance on Rule 12d1-4. Any investment company interested in purchasing shares of the Funds beyond the limits set forth in Section 12(d)(1) should contact the Trust.
Additional Tax Information
The following discussion is a summary of some important U.S. federal income tax considerations generally applicable to investments in the Funds. Your investment in a Fund may have other tax implications. Please consult your tax advisor about the tax consequences of an investment in Fund shares, including the possible application of foreign, state, and local tax laws.
Each Fund has elected or intends to elect to qualify each year for treatment as a RIC. If it meets certain minimum distribution requirements, a RIC is not subject to tax at the fund level on income and gains from investments that are timely distributed to shareholders. However, a Fund’s failure to qualify as a RIC or to meet minimum distribution requirements would result (if certain relief provisions were not available) in fund-level taxation and consequently a reduction in income available for distribution to shareholders.
Unless you are a tax-exempt entity or your investment in Fund shares is made through tax-deferred retirement account, such as an individual retirement account, you need to be aware of the possible tax consequences when:
■ | A Fund makes distributions; |
■ | You sell Fund shares; and |
■ | You purchase or redeem Creation Units (Authorized Participants only). |
Taxes on Distributions
For federal income tax purposes, distributions of investment income are generally taxable as ordinary income or qualified dividend income. Taxes on distributions of capital gains (if any) are determined by how long a Fund owned the assets that generated them, rather than how long a shareholder has owned Fund shares. Sales of assets held by a Fund for more than one year generally result in long-term capital gains and losses, and sales of assets held by a Fund for one year or less generally result in short-term capital gains and losses. Distributions of a Fund’s net capital gain (the excess of net long-term capital gains over net short-term capital losses) that are properly reported by the Fund as capital gain dividends (“Capital Gain Dividends”) will be taxable as long-term capital gains. For non-corporate shareholders, long-term capital gains are generally subject to tax at reduced rates. Distributions of short-term capital gain will generally be taxable as ordinary income. Distributions reported by a Fund as “qualified dividend income” are generally taxed to non-corporate shareholders at rates applicable to long-term capital gains, provided holding period and other requirements are met. “Qualified dividend income” generally is income derived from dividends paid by U.S. corporations or certain foreign corporations that are either incorporated in a U.S. possession or eligible for tax benefits under certain U.S. income tax treaties. In addition, dividends that the Fund received in respect of stock of certain foreign corporations may be qualified dividend income if that stock is readily tradable on an established U.S. securities market. However, to the extent a Fund lends its securities and receives substitute dividend payments, such payments are not expected to generate qualified dividend income when distributed to shareholders. The trading strategies of certain Funds may limit their ability to make distributions eligible for the reduced tax rates applicable to qualified dividend income. Additionally, since each Fund’s income is derived primarily from investments other than stock of U.S. corporations, it is not expected that dividends paid by a Fund will qualify for the dividends received deduction for corporate shareholders.
In general, your distributions are subject to federal income tax for the year in which they are paid. Certain distributions paid in January, but declared by a Fund in October, November or December of the previous year, may be treated as paid on December 31 of the prior year. Distributions are generally taxable even if they are paid from income or gains earned by a Fund before your investment (and thus were included in the price you paid for your shares).
Dividends and distributions from the Funds and capital gain on the sale of Fund shares are generally taken into account in determining a shareholder’s “net investment income” for purposes of the 3.8% tax on net investment income applicable to certain individuals, estates and trusts.
202 WisdomTree Trust Prospectus |
A Fund may include cash when paying the redemption price for Creation Units in addition to, or in place of, the delivery of a basket of securities. A Fund may be required to sell portfolio securities in order to obtain the cash needed to distribute redemption proceeds. This may cause such Funds to recognize investment income and/or capital gains or losses that it might not have recognized if it had completely satisfied the redemption in kind. As a result, such Funds may be less tax efficient if it includes such a cash payment than if the in-kind redemption process was used.
Distributions (other than Capital Gain Dividends) paid to shareholders that are neither citizens nor residents of the U.S. or to foreign entities will generally be subject to a U.S. withholding tax at the rate of 30%, unless a lower treaty rate applies, but Capital Gain Dividends generally are not subject to U.S. taxation, unless you are a nonresident alien individual who is physically present in the United States for 183 days or more per year. A Fund may, under certain circumstances, report all or a portion of a dividend as an “interest related dividend” or a “short term capital gain dividend,” which would generally be exempt from this 30% U.S. withholding tax, provided certain other requirements are met. Different tax consequences may result if you are a non-U.S. shareholder engaged in a trade or business within the United States.
You should note that if you purchase shares just before a distribution, the purchase price would reflect the amount of the upcoming distribution. In this case, you would be taxed on the entire amount of the distribution received, even though, as an economic matter, the distribution simply constitutes a return of your investment. This is known as “buying a dividend” and should be avoided by taxable investors.
The Fund (or your broker) will inform you of the amount and character of any distributions shortly after the close of each calendar year.
Certain Funds may invest in U.S. REITs. “Qualified REIT dividends” (i.e., ordinary REIT dividends other than capital gain dividends and portions of REIT dividends designated as qualified dividend income eligible for capital gain tax rates) are eligible for a 20% deduction by non-corporate taxpayers. This deduction, if allowed in full, equates to a maximum effective tax rate of 29.6% (37% top rate applied to income after 20% deduction). Distributions by a Fund to its shareholders that are attributable to qualified REIT dividends received by such Fund and which such Fund properly reports as “section 199A dividends,” are treated as “qualified REIT dividends” in the hands of non-corporate shareholders. A section 199A dividend is treated as a qualified REIT dividend only if the shareholder receiving such dividend holds the dividend-paying RIC shares for at least 46 days of the 91-day period beginning 45 days before the shares become ex-dividend, and is not under an obligation to make related payments with respect to a position in substantially similar or related property. A Fund is permitted to report such part of its dividends as section 199A dividends as are eligible, but is not required to do so.
REITs in which a Fund invests often do not provide complete and final tax information to the Fund until after the time that the Fund issues a tax reporting statement. As a result, a Fund may at times find it necessary to reclassify the amount and character of its distributions to you after it issues your tax reporting statement. When such reclassification is necessary, the Fund (or a financial intermediary, such as a broker, through which a shareholder owns shares) will send you a corrected, final Form 1099-DIV to reflect the reclassified information. If you receive a corrected Form 1099-DIV, use the information on this corrected form, and not the information on the previously issued tax reporting statement, in completing your tax returns.
The Funds (or financial intermediaries, such as brokers, through which shareholders own Fund shares) generally are required to withhold and to remit to the U.S. Treasury a percentage of the taxable distributions and the sale or redemption proceeds paid to any shareholder who fails to properly furnish a correct taxpayer identification number, who has under-reported dividend or interest income, or who fails to certify that he, she or it is not subject to such withholding.
Taxes When You Sell Fund Shares
Assuming you hold Fund shares as capital assets, any capital gain or loss realized upon a sale of Fund shares is generally treated as a long-term gain or loss if you held the shares you sold for more than one year. Any capital gain or loss realized upon a sale of Fund shares held for one year or less is generally treated as a short-term gain or loss, except that any capital loss on a sale of shares held for six months or less is treated as a long-term capital loss to the extent of Capital Gain Dividends paid with respect to such shares. The ability to deduct capital losses may be limited depending on your circumstances.
WisdomTree Trust Prospectus 203 |
Taxes on Creation and Redemption of Creation Units
An Authorized Participant having the U.S. dollar as its functional currency for U.S. federal income tax purposes that exchanges securities for Creation Units generally will recognize a gain or loss equal to the difference between (i) the sum of the market value of the Creation Units at the time of the exchange and any amount of cash received by the Authorized Participant in the exchange and (ii) the sum of the exchanger’s aggregate basis in the securities surrendered and any amount of cash paid for such Creation Units. A person who redeems Creation Units will generally recognize a gain or loss equal to the difference between the exchanger’s basis in the Creation Units and the sum of the aggregate U.S. dollar market value of the securities plus the amount of any cash received for such Creation Units. The Internal Revenue Service (the “IRS”), however, may assert that a loss that is realized upon an exchange of securities for Creation Units may not be permitted to be currently deducted under the rules governing “wash sales” (for a person who does not mark-to-market their holdings), or on the basis that there has been no significant change in economic position.
Gain or loss recognized by an Authorized Participant upon an issuance of Creation Units in exchange for non-U.S. currency will generally be treated as ordinary income or loss. Gain or loss recognized by an Authorized Participant upon an issuance of Creation Units in exchange for securities, or upon a redemption of Creation Units, may be capital or ordinary gain or loss depending on the circumstances. Any capital gain or loss realized upon an issuance of Creation Units in exchange for securities will generally be treated as long-term capital gain or loss if the securities have been held for more than one year. Any capital gain or loss realized upon the redemption of a Creation Unit will generally be treated as long-term capital gain or loss if the Fund shares comprising the Creation Unit have been held for more than one year. Otherwise, such capital gains or losses are treated as short-term capital gains or losses.
A person subject to U.S. federal income tax with the U.S. dollar as its functional currency who receives non-U.S. currency upon a redemption of Creation Units and does not immediately convert the non-U.S. currency into U.S. dollars may, upon a later conversion of the non-U.S. currency into U.S. dollars, recognize any gains or losses resulting from fluctuations in the value of the non-U.S. currency relative to the U.S. dollar since the date of the redemption. Any such gains or losses will generally be treated as ordinary income or loss.
Persons exchanging securities or non-U.S. currency for Creation Units should consult their own tax advisors with respect to the tax treatment of any creation or redemption transaction and whether the wash sales rules apply and when a loss might be deductible. If you purchase or redeem Creation Units, you will be sent a confirmation statement showing how many Fund shares you purchased or redeemed and at what price.
Foreign Investments by the Fund
Dividends, interest and other income received by a Fund with respect to foreign securities may give rise to withholding and other taxes imposed by foreign countries. Tax conventions between certain countries and the United States may reduce or eliminate such taxes. The Funds may need to file special claims for refunds to secure the benefits of a reduced rate. If as of the close of a taxable year more than 50% of the total assets of a Fund consist of stock or securities of foreign corporations, the Fund intends to elect to “pass through” to investors the amount of foreign income and similar taxes (including withholding taxes) paid by the Fund during that taxable year. If a Fund elects to “pass through” such foreign taxes, then investors will be considered to have received as additional income their respective shares of such foreign taxes, but may be entitled to either a corresponding tax deduction in calculating taxable income, or, subject to certain limitations, a credit in calculating federal income tax.
The foregoing discussion summarizes some of the consequences under current U.S. federal income tax law of an investment in a Fund. It is not a substitute for personal tax advice. Consult your personal tax advisor about the potential tax consequences of an investment in a Fund under all applicable tax laws.
Additional Tax Information - Taxation in India
The WisdomTree India Earnings Fund (the “Fund”) invests in the WisdomTree India Investment Portfolio, Inc. (the “WisdomTree Subsidiary”), a wholly-owned subsidiary organized in the Republic of Mauritius, which invests in Indian securities. The WisdomTree Subsidiary is also advised by WisdomTree Asset Management and sub-advised by the Sub-Adviser. The WisdomTree Subsidiary holds a tax residency certificate issued by the Mauritian Revenue authorities which entitles it to claim the benefits of the double taxation avoidance agreement entered between India and Mauritius (“tax treaty”). Since the Fund makes its investments through the WisdomTree Subsidiary, a wholly owned subsidiary organized in the Republic of Mauritius, this structure should permit the Fund to benefit from the tax treaty subject to procedural compliances.
The Supreme Court of India upheld the validity of this tax treaty in response to a lower court challenge contesting the treaty’s applicability to entities such as the Fund. The tax treaty was renegotiated and amended by way of a protocol (“2016 Protocol”). Under the 2016 Protocol, capital gains arising on a sale of Indian shares purchased by Mauritius entities on or after April 1, 2017, are subject to capital gains tax in India. It is important to note that the 2016 Protocol's amendment to the capital gains article of the tax treaty is only in relation to the taxation of shares.
204 WisdomTree Trust Prospectus |
In other words, benefits under the tax treaty with respect to all other “securities” besides shares should remain available subject to procedural compliances. This amendment could reduce the return to the Fund on its investments made on or after April 1, 2017, and the return received by Fund shareholders.
In March 2012, the Indian Finance Minister introduced a new chapter to the Indian Income Tax Act, 1961 (“IT Act”), which included certain General Anti-Avoidance Rules (“GAAR”). The Finance Act, 2015 (“FA 2015”) subsequently amended the IT Act to defer the applicability of GAAR to Indian financial years beginning on or after April 1, 2017. Further, gains arising from all investments made in India up to March 31, 2017, have been grandfathered and exempted from the applicability of GAAR. The Central Board of Direct Taxes has also issued Circular No. 7 of 2017 (“GAAR Circular”) providing clarifications on the implementation of GAAR by way of responses to queries raised by various stakeholders in the context of its applicability. The GAAR Circular specifically provides where a Foreign Portfolio Investor (such as the WisdomTree Subsidiary) is located in a particular jurisdiction based on non-tax commercial reasons and the main purpose of the choice of location/residence of the Foreign Portfolio Investor is not to obtain a treaty benefit, the GAAR provisions will not be resorted to by the Indian tax authorities. The application of the GAAR may result in the imposition of tax liabilities and withholding tax obligations which may potentially affect the return received by Fund shareholders.
The Finance Bill, 2019 proposed an increase in the rate of surcharge applicable on non-corporate entities. Although when the Finance Act, 2019 was subsequently enacted, this proposal was modified to limit the surcharge on Foreign Portfolio Investors, no assurance can be given that the Indian Government will not extend the application of the increased surcharge to Foreign Portfolio Investors, such as the WisdomTree Subsidiary, which could significantly increase the effective capital gains tax rates for the WisdomTree Subsidiary, and thereby negatively impact the Fund.
In past audits concluded that have not involved the WisdomTree Subsidiary, the tax authorities in India have sought to apply a Minimum Alternate Tax (MAT) on certain Foreign Portfolio Investors investing into India on the income earned during the past periods. The Indian Government formed a Committee to make recommendations on the applicability of MAT to foreign investors, and in September 2015, the Indian Government, on recommendation from the Committee, determined that MAT shall not apply to certain Foreign Portfolio Investors such as the WisdomTree Subsidiary. To date, the WisdomTree Subsidiary has not received any notice seeking the application of MAT to the WisdomTree Subsidiary, although no assurance can be given that the Indian Government will not determine application of MAT differently in the future, such that MAT could be imposed on the WisdomTree Subsidiary, which would negatively impact the Fund.
Finance Act 2023 has extended the scope of angel tax provisions to investments made by non-residents in Indian closely held companies. Prior to April 1, 2023, such provisions were applicable only to investments made by Indian residents in Indian closely held companies.
By way of the amended provisions, tax is sought to be levied in the hands of an Indian company where shares are issued by such Indian company to any entity (including non-residents) at a price higher than the fair market value computed as per tax provisions. Certain amendments are also sought to be introduced to the tax valuation rules but these amendments are not yet effective. While there are few exceptions to the application of such provisions, the amended provisions could increase the tax costs of the Indian companies raising investments from overseas investors (including the Fund). Such tax costs could potentially impact the return to be received by the Fund and its shareholders.
Reference to investments by the Fund herein should be understood to refer to investments by the WisdomTree Subsidiary. The taxable profits derived from the worldwide income of the wholly owned subsidiary of the Fund, the WisdomTree Subsidiary, is subject to income tax at the rate of 15% in the Republic of Mauritius. As with all Mauritian tax residents, the WisdomTree Subsidiary is entitled to a foreign tax credit (“FTC”) on its foreign sourced income. The FTC is based on the lower of the Mauritian tax or the foreign taxes incurred. Alternatively, the WisdomTree Subsidiary may be eligible for a partial exemption on certain types of foreign source income (such as dividends or interest income), subject to substance requirements being met. If applicable, 80% of the relevant chargeable income is exempt, resulting in an effective tax rate of 3%. There is no tax on capital gains in Mauritius. Effective August 8, 2012, in connection with the new advisory agreement, the Mauritius income tax is paid by WisdomTree Asset Management.
Distribution
Foreside Fund Services, LLC (the “Distributor”) serves as the distributor of Creation Units for each Fund on an agency basis. The Distributor does not maintain a secondary market in shares of the Funds. The Distributor’s principal address is Three Canal Plaza, Suite 100, Portland, Maine 04101. The Distributor has no role in determining the policies of any Fund or the securities that are purchased or sold by any Fund.
WisdomTree Trust Prospectus 205 |
Premium/Discount and NAV Information
Information regarding a Fund’s NAV and how often shares of each Fund traded on the Listing Exchange at a price above (i.e., at a premium) or below (i.e., at a discount) the NAV of the Fund during the past calendar year and most recent calendar quarter is available at www.wisdomtree.com/investments.
Additional Notices
Listing Exchange
Shares of the Funds are not sponsored, endorsed, or promoted by the Listing Exchange. The Listing Exchange makes no representation or warranty, express or implied, to the owners of the shares of any Fund or any member of the public regarding the ability of a Fund to track the total return performance of any Index or the ability of any Index identified herein to track stock market performance. The Listing Exchange is not responsible for, nor has it participated in, the determination of the compilation or the calculation of any Index, nor in the determination of the timing of, prices of, or quantities of the shares of any Fund to be issued, nor in the determination or calculation of the equation by which the shares are redeemable. The Listing Exchange has no obligation or liability to owners of the shares of any Fund in connection with the administration, marketing, or trading of the shares of the Fund.
The Listing Exchange does not guarantee the accuracy and/or the completeness of any Index or any data included therein. The Listing Exchange makes no warranty, express or implied, as to results to be obtained by the Trust on behalf of the Funds, owners of the shares, or any other person or entity from the use of the Indexes or any data included therein. The Listing Exchange makes no express or implied warranties, and hereby expressly disclaims all warranties of merchantability or fitness for a particular purpose with respect to any Index or any data included therein. Without limiting any of the foregoing, in no event shall the Listing Exchange have any liability for any lost profits or indirect, punitive, special, or consequential damages even if notified of the possibility thereof.
WisdomTree and the Funds
WisdomTree and WisdomTree Asset Management (together, “WT”) and the Funds make no representation or warranty, express or implied, to the owners of shares of the Funds or any member of the public regarding the advisability of investing in securities generally or in the Funds particularly or with respect to the Index Funds (with the exception of the New Economy Real Estate Fund), the ability of any WisdomTree Index to track general stock market performance. WisdomTree is the licensor of certain Indexes, trademarks, service marks and trade names of the Funds. WisdomTree has no obligation to take the needs of the Index Funds or the owners of shares of the Index Funds into consideration in determining, composing, or calculating the WisdomTree Indexes. WisdomTree is not responsible for, and has not participated in, the determination of the timing, prices, or quantities of shares of the Funds to be issued or in the determination or calculation of the equation by which the shares of the Funds are redeemable. WT and the Funds do not guarantee the accuracy, completeness, or performance of any Index or the data included therein and shall have no liability in connection with any Index, including any WisdomTree Index, or Index calculation. A WisdomTree Index’s past performance is not necessarily an indication of how the WisdomTree Index will perform in the future. WisdomTree has contracted with an independent calculation agent to calculate each WisdomTree Index.
CenterSquare Investment Management LLC
The New Economy Real Estate Fund is not sponsored, endorsed, sold or promoted by CenterSquare, any of its affiliates or any other third party involved in, or related to, calculating, compiling or creating the CenterSquare New Economy Real Estate Index (collectively, the “CenterSquare Parties”). The CenterSquare New Economy Real Estate Index is the exclusive property of CenterSquare and has been licensed for use by WisdomTree Asset Management and WisdomTree Trust as the Issuer of the New Economy Real Estate Fund. CenterSquare and the CenterSquare New Economy Real Estate Index’s name are trademarks of CenterSquare. None of the CenterSquare Parties makes any representation or warranty, express or implied, to the issuer or owners of shares of the New Economy Real Estate Fund, or any other person or entity, regarding the advisability of investing in funds generally, or in the New Economy Real Estate Fund particularly, or the ability of the CenterSquare New Economy Real Estate Index to track its corresponding market performance. None of the CenterSquare Parties has any obligation to take the needs of the issuer or owners of shares of the New Economy Real Estate Fund, or any other person or entity, into consideration in determining, composing or calculating the CenterSquare New Economy Real Estate Index. None of the CenterSquare Parties is responsible for, or has participated in, the determination of the timing of, prices at, or quantities of the New Economy Real Estate Fund to be issued or in the determination or calculation of the equation by, or the consideration into which, the New Economy Real Estate Fund is redeemable. Further, none of the CenterSquare Parties has any obligation or liability to the issuer or owners of shares of the New Economy Real Estate Fund, or any other person or entity, in connection with the administration, marketing or offering of the New Economy Real Estate Fund, whether as a result of statements included in the New Economy Real Estate Fund’s public offering documents or otherwise.
206 WisdomTree Trust Prospectus |
Financial Highlights
The financial highlights table is intended to help you understand each Fund’s financial performance for the past five fiscal years or, if shorter, the period since a Fund’s inception. The total return in the table represents the rate that an investor would have earned (or lost) on an investment in the respective Fund (assuming reinvestment of all dividends and distributions). This information has been derived from the financial statements audited by Ernst & Young LLP, an independent registered public accounting firm, whose report, along with the Funds’ financial statements, are included in the Funds’ Annual Report, which is available upon request.
WisdomTree Trust Prospectus 207 |
Financial Highlights
Selected data for a share of beneficial interest outstanding throughout the period is presented below:
WisdomTree
China ex-State-Owned Enterprises Fund |
For the Year Ended March 31, 2023 |
For the Year Ended March 31, 2022 |
For
the Year Ended March 31, 20211 |
For
the Year Ended March 31, 20201 |
For
the Year Ended March 31, 20191 |
|||||||||||||||
Net asset value, beginning of year | $ | 40.89 | $ | 64.41 | $ | 38.44 | $ | 38.84 | $ | 43.62 | ||||||||||
Investment operations: | ||||||||||||||||||||
Net investment income2 | 0.36 | 0.60 | 0.23 | 0.39 | 0.49 | |||||||||||||||
Net realized and unrealized gain (loss) | (5.94 | ) | (23.54 | ) | 26.10 | (0.39 | ) | (4.82 | ) | |||||||||||
Total from investment operations | (5.58 | ) | (22.94 | ) | 26.33 | 0.003 | (4.33 | ) | ||||||||||||
Dividends and distributions to shareholders: | ||||||||||||||||||||
Net investment income | (0.38 | ) | (0.58 | ) | (0.35 | ) | (0.40 | ) | (0.45 | ) | ||||||||||
Tax return of capital | — | — | (0.01 | ) | — | (0.00 | )3 | |||||||||||||
Total dividends and distributions to shareholders | (0.38 | ) | (0.58 | ) | (0.36 | ) | (0.40 | ) | (0.45 | ) | ||||||||||
Net asset value, end of year | $ | 34.93 | $ | 40.89 | $ | 64.41 | $ | 38.44 | $ | 38.84 | ||||||||||
TOTAL RETURN4 | (13.72 | )% | (35.81 | )% | 68.71 | % | 0.07 | % | (9.91 | )% | ||||||||||
RATIOS/SUPPLEMENTAL DATA: | ||||||||||||||||||||
Net assets, end of year (000’s omitted) | $ | 737,988 | $ | 835,280 | $ | 914,692 | $ | 188,351 | $ | 143,699 | ||||||||||
Ratios to average net assets of: | ||||||||||||||||||||
Expenses, net of expense waivers | 0.32 | % | 0.32 | % | 0.32 | %5 | 0.32 | %6 | 0.32 | %6 | ||||||||||
Expenses, prior to expense waivers | 0.32 | % | 0.32 | % | 0.38 | % | 0.63 | % | 0.63 | % | ||||||||||
Net investment income | 0.99 | % | 1.10 | % | 0.37 | % | 1.03 | % | 1.31 | % | ||||||||||
Portfolio turnover rate7 | 39 | % | 36 | % | 20 | % | 22 | % | 35 | % |
WisdomTree
Emerging Markets ex-State-Owned Enterprises Fund |
For the Year Ended March 31, 2023 |
For the Year Ended March 31, 2022 |
For the Year Ended March 31, 2021 |
For the Year Ended March 31, 2020 |
For the Year Ended March 31, 2019 |
|||||||||||||||
Net asset value, beginning of year | $ | 33.10 | $ | 40.31 | $ | 24.40 | $ | 28.79 | $ | 31.99 | ||||||||||
Investment operations: | ||||||||||||||||||||
Net investment income2 | 0.56 | 0.62 | 0.41 | 0.62 | 0.42 | |||||||||||||||
Net realized and unrealized gain (loss) | (5.27 | ) | (7.28 | ) | 15.91 | (4.38 | ) | (3.20 | ) | |||||||||||
Net increase from payment by affiliate | — | 0.00 | 3 | 0.00 | 3 | — | 0.00 | 3 | ||||||||||||
Total from investment operations | (4.71 | ) | (6.66 | ) | 16.32 | (3.76 | ) | (2.78 | ) | |||||||||||
Dividends to shareholders: | ||||||||||||||||||||
Net investment income | (0.60 | ) | (0.55 | ) | (0.41 | ) | (0.63 | ) | (0.42 | ) | ||||||||||
Net asset value, end of year | $ | 27.79 | $ | 33.10 | $ | 40.31 | $ | 24.40 | $ | 28.79 | ||||||||||
TOTAL RETURN4 | (14.20 | )% | (16.70 | )%8 | 67.18 | %9 | (13.36 | )% | (8.64 | )%9 | ||||||||||
RATIOS/SUPPLEMENTAL DATA: | ||||||||||||||||||||
Net assets, end of year (000’s omitted) | $ | 2,170,527 | $ | 3,319,866 | $ | 4,719,936 | $ | 809,991 | $ | 305,184 | ||||||||||
Ratios to average net assets of: | ||||||||||||||||||||
Expenses, net of expense waivers | 0.32 | % | 0.32 | % | 0.32 | %5 | 0.32 | %6 | 0.32 | %6 | ||||||||||
Expenses, prior to expense waivers | 0.32 | % | 0.32 | % | 0.37 | % | 0.58 | % | 0.58 | % | ||||||||||
Net investment income | 1.97 | % | 1.62 | % | 1.11 | % | 2.14 | % | 1.51 | % | ||||||||||
Portfolio turnover rate7 | 28 | % | 18 | % | 34 | % | 19 | % | 24 | % |
1 | Shares were adjusted to reflect a 2:1 stock split effective October 16, 2020. |
2 | Based on average shares outstanding. |
3 | Amount represents less than $0.005. |
4 | Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period and redemption on the last day of the period. For the periods in which the investment advisor waived advisory fees, the total return would have been lower if certain expenses had not been waived. |
5 | The investment advisor had contractually agreed to limit the advisory fee to 0.32% through July 31, 2020. On July 31, 2020, the contractual waiver expired and the advisory fee was permanently reduced to 0.32%. |
6 | Effective June 30, 2017, the investment advisor contractually agreed to limit the advisory fee to 0.32% through July 31, 2020, unless earlier terminated by the Board of Trustees of the Trust. |
7 | Portfolio turnover rate excludes the value of the portfolio securities received or delivered as a result of in-kind creations or redemptions of the Fund’s capital shares. Short-term securities with maturities less than or equal to 365 days are excluded from the portfolio turnover calculation. |
8 | Includes a voluntary reimbursement from the sub-advisor for investment losses on certain foreign exchange transactions during the period. Excluding this voluntary reimbursement, total return would have been unchanged. |
9 | Includes a reimbursement from the sub-advisor for an operational error that resulted in investment transaction losses. Excluding the reimbursement, total return would have been unchanged. |
208 WisdomTree Trust Prospectus |
Financial Highlights
Selected data for a share of beneficial interest outstanding throughout the period is presented below:
WisdomTree
Emerging Markets High Dividend Fund |
For the Year Ended March 31, 2023 |
For the Year Ended March 31, 2022 |
For the Year Ended March 31, 2021 |
For the Year Ended March 31, 2020 |
For the Year Ended March 31, 2019 |
|||||||||||||||
Net asset value, beginning of year | $ | 43.98 | $ | 44.27 | $ | 32.45 | $ | 43.72 | $ | 47.35 | ||||||||||
Investment operations: | ||||||||||||||||||||
Net investment income1 | 2.81 | 2.75 | 1.76 | 2.10 | 1.84 | |||||||||||||||
Net realized and unrealized gain (loss) | (6.21 | ) | (0.30 | ) | 11.93 | (11.25 | ) | (3.57 | ) | |||||||||||
Total from investment operations | (3.40 | ) | 2.45 | 13.69 | (9.15 | ) | (1.73 | ) | ||||||||||||
Dividends to shareholders: | ||||||||||||||||||||
Net investment income | (2.80 | ) | (2.74 | ) | (1.87 | ) | (2.12 | ) | (1.90 | ) | ||||||||||
Net asset value, end of year | $ | 37.78 | $ | 43.98 | $ | 44.27 | $ | 32.45 | $ | 43.72 | ||||||||||
TOTAL RETURN2 | (6.97 | )% | 5.65 | % | 43.37 | % | (22.06 | )% | (3.51 | )% | ||||||||||
RATIOS/SUPPLEMENTAL DATA: | ||||||||||||||||||||
Net assets, end of year (000’s omitted) | $ | 2,145,840 | $ | 2,119,845 | $ | 1,916,702 | $ | 1,638,935 | $ | 2,173,006 | ||||||||||
Ratios to average net assets3 of: | ||||||||||||||||||||
Expenses4 | 0.63 | %5 | 0.64 | %6 | 0.63 | % | 0.63 | % | 0.63 | % | ||||||||||
Net investment income | 7.53 | % | 6.16 | % | 4.58 | % | 4.91 | % | 4.23 | % | ||||||||||
Portfolio turnover rate7 | 43 | % | 53 | % | 62 | % | 41 | % | 44 | % |
WisdomTree
Emerging Markets Multifactor Fund |
For the Year Ended March 31, 2023 |
For the Year Ended March 31, 2022 |
For the Year Ended March 31, 2021 |
For the Year Ended March 31, 2020 |
For the Period August 10, 2018* through March 31, 2019 |
|||||||||||||||
Net asset value, beginning of period | $ | 23.66 | $ | 25.81 | $ | 17.75 | $ | 23.61 | $ | 24.68 | ||||||||||
Investment operations: | ||||||||||||||||||||
Net investment income1 | 0.90 | 1.01 | 0.56 | 0.73 | 0.29 | |||||||||||||||
Net realized and unrealized gain (loss) | (2.30 | ) | (2.44 | ) | 7.90 | (5.91 | ) | (1.16 | ) | |||||||||||
Total from investment operations | (1.40 | ) | (1.43 | ) | 8.46 | (5.18 | ) | (0.87 | ) | |||||||||||
Dividends to shareholders: | ||||||||||||||||||||
Net investment income | (0.71 | ) | (0.72 | ) | (0.40 | ) | (0.68 | ) | (0.20 | ) | ||||||||||
Net asset value, end of period | $ | 21.55 | $ | 23.66 | $ | 25.81 | $ | 17.75 | $ | 23.61 | ||||||||||
TOTAL RETURN2 | (5.74 | )% | (5.72 | )% | 48.12 | % | (22.44 | )% | (3.52 | )% | ||||||||||
RATIOS/SUPPLEMENTAL DATA: | ||||||||||||||||||||
Net assets, end of year (000’s omitted) | $ | 2,155 | $ | 2,366 | $ | 5,162 | $ | 7,102 | $ | 18,886 | ||||||||||
Ratios to average net assets of: | ||||||||||||||||||||
Expenses | 0.48 | % | 0.48 | %3,4 | 0.48 | %3,4 | 0.48 | % | 0.48 | %4,8 | ||||||||||
Net investment income | 4.21 | % | 3.91 | %3 | 2.51 | %3 | 3.24 | % | 1.97 | %8 | ||||||||||
Portfolio turnover rate7 | 123 | % | 115 | % | 125 | % | 166 | % | 133 | % |
* | Commencement of operations. The commencement of operations date is considered to be the date that the Fund began trading in the secondary market. |
1 | Based on average shares outstanding. |
2 | Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period and redemption on the last day of the period. Total return calculated for a period of less than one year is not annualized. For the periods in which the investment advisor waived advisory fees, the total return would have been lower if certain expenses had not been waived. |
3 | The ratios to average net assets do not include net investment income (loss) or expenses of other funds in which the Fund invests. |
4 | The expense ratio includes investment advisory fee waivers. Without these investment advisory fee waivers, the expense ratio would have been unchanged. |
5 | Included in the expense ratio are “Other fees”. Without these expenses, the expense ratio would have been unchanged. |
6 | Included in the expense ratio are “Other fees”. Without these expenses, the expense ratio would have been 0.63%. |
7 | Portfolio turnover rate is not annualized for fiscal periods less than one year and excludes the value of the portfolio securities received or delivered as a result of in-kind creations or redemptions of the Fund’s capital shares. Short-term securities with maturities less than or equal to 365 days are excluded from the portfolio turnover calculation. |
8 | Annualized. |
WisdomTree Trust Prospectus 209 |
Financial Highlights
Selected data for a share of beneficial interest outstanding throughout the period is presented below:
WisdomTree
Emerging Markets Quality Dividend Growth Fund |
For the Year Ended March 31, 2023 |
For the Year Ended March 31, 2022 |
For the Year Ended March 31, 2021 |
For the Year Ended March 31, 2020 |
For the Year Ended March 31, 2019 |
|||||||||||||||
Net asset value, beginning of year | $ | 26.27 | $ | 29.51 | $ | 19.43 | $ | 24.71 | $ | 26.94 | ||||||||||
Investment operations: | ||||||||||||||||||||
Net investment income1 | 0.80 | 0.83 | 0.61 | 0.66 | 0.71 | |||||||||||||||
Net realized and unrealized gain (loss) | (3.69 | ) | (3.28 | ) | 10.08 | (5.32 | ) | (2.30 | ) | |||||||||||
Total from investment operations | (2.89 | ) | (2.45 | ) | 10.69 | (4.66 | ) | (1.59 | ) | |||||||||||
Dividends to shareholders: | ||||||||||||||||||||
Net investment income | (0.90 | ) | (0.79 | ) | (0.61 | ) | (0.62 | ) | (0.64 | ) | ||||||||||
Net asset value, end of year | $ | 22.48 | $ | 26.27 | $ | 29.51 | $ | 19.43 | $ | 24.71 | ||||||||||
TOTAL RETURN2 | (10.75 | )% | (8.48 | )% | 55.66 | % | (19.30 | )% | (5.79 | )% | ||||||||||
RATIOS/SUPPLEMENTAL DATA: | ||||||||||||||||||||
Net assets, end of year (000’s omitted) | $ | 87,681 | $ | 86,705 | $ | 94,431 | $ | 69,936 | $ | 69,189 | ||||||||||
Ratios to average net assets of: | ||||||||||||||||||||
Expenses, net of expense waivers | 0.32 | % | 0.32 | % | 0.32 | %3 | 0.32 | %4 | 0.32 | %4 | ||||||||||
Expenses, prior to expense waivers | 0.32 | % | 0.32 | % | 0.42 | % | 0.63 | % | 0.63 | % | ||||||||||
Net investment income | 3.61 | % | 2.89 | % | 2.38 | % | 2.74 | % | 2.93 | % | ||||||||||
Portfolio turnover rate5 | 40 | % | 42 | % | 57 | % | 55 | % | 81 | % |
WisdomTree
Emerging Markets SmallCap Dividend Fund |
For the Year Ended March 31, 2023 |
For the Year Ended March 31, 2022 |
For the Year Ended March 31, 2021 |
For the Year Ended March 31, 2020 |
For the Year Ended March 31, 2019 |
|||||||||||||||
Net asset value, beginning of year | $ | 53.44 | $ | 50.79 | $ | 32.98 | $ | 47.03 | $ | 53.47 | ||||||||||
Investment operations: | ||||||||||||||||||||
Net investment income1 | 2.25 | 1.99 | 1.58 | 1.82 | 1.79 | |||||||||||||||
Net realized and unrealized gain (loss) | (7.65 | ) | 2.80 | 18.04 | (14.02 | ) | (6.35 | ) | ||||||||||||
Total from investment operations | (5.40 | ) | 4.79 | 19.62 | (12.20 | ) | (4.56 | ) | ||||||||||||
Dividends to shareholders: | ||||||||||||||||||||
Net investment income | (2.32 | ) | (2.14 | ) | (1.81 | ) | (1.85 | ) | (1.88 | ) | ||||||||||
Net asset value, end of year | $ | 45.72 | $ | 53.44 | $ | 50.79 | $ | 32.98 | $ | 47.03 | ||||||||||
TOTAL RETURN2 | (9.76 | )% | 9.48 | % | 60.63 | % | (26.95 | )% | (8.40 | )% | ||||||||||
RATIOS/SUPPLEMENTAL DATA: | ||||||||||||||||||||
Net assets, end of year (000’s omitted) | $ | 2,688,439 | $ | 2,575,592 | $ | 1,935,213 | $ | 1,216,850 | $ | 1,424,969 | ||||||||||
Ratios to average net assets6 of: | ||||||||||||||||||||
Expenses7 | 0.58 | % | 0.61 | %8,9 | 0.63 | % | 0.63 | % | 0.63 | % | ||||||||||
Net investment income | 4.96 | % | 3.75 | % | 3.65 | % | 4.05 | % | 3.81 | % | ||||||||||
Portfolio turnover rate5 | 53 | % | 45 | % | 59 | % | 47 | % | 40 | % |
1 | Based on average shares outstanding. |
2 | Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period and redemption on the last day of the period. For the periods in which the investment advisor waived advisory fees, the total return would have been lower if certain expenses had not been waived. |
3 | The investment advisor had contractually agreed to limit the advisory fee to 0.32% through July 31, 2020. On July 31, 2020, the contractual waiver expired and the advisory fee was permanently reduced to 0.32%. |
4 | Effective June 30, 2017, the investment advisor contractually agreed to limit the advisory fee to 0.32% through July 31, 2020, unless earlier terminated by the Board of Trustees of the Trust. |
5 | Portfolio turnover rate excludes the value of the portfolio securities received or delivered as a result of in-kind creations or redemptions of the Fund’s capital shares. Short-term securities with maturities less than or equal to 365 days are excluded from the portfolio turnover calculation. |
6 | The ratios to average net assets do not include net investment income (loss) or expenses of other funds in which the Fund invests. |
7 | The expense ratio includes investment advisory fee waivers. Without these investment advisory fee waivers, the expense ratio would have been unchanged. |
8 | Prior to September 1, 2021, the Fund’s annual advisory fee rate was 0.63% and, thereafter, was reduced to 0.58% per annum. |
9 | Included in the expense ratio are “Other fees”. Without these expenses, the expense ratio would have been 0.60%. |
210 WisdomTree Trust Prospectus |
Financial Highlights
Selected data for a share of beneficial interest outstanding throughout the period is presented below:
WisdomTree
Global ex-U.S. Quality Dividend Growth Fund |
For the Year Ended March 31, 2023 |
For
the Year Ended March 31, 20221 |
For
the Year Ended March 31, 20211 |
For
the Year Ended March 31, 20201 |
For
the Year Ended March 31, 20191 |
|||||||||||||||
Net asset value, beginning of year | $ | 39.95 | $ | 38.60 | $ | 26.57 | $ | 27.80 | $ | 29.52 | ||||||||||
Investment operations: | ||||||||||||||||||||
Net investment income2 | 1.38 | 1.01 | 0.80 | 0.80 | 0.58 | |||||||||||||||
Net realized and unrealized gain (loss) | (4.62 | ) | 1.15 | 11.94 | (1.31 | ) | (1.67 | ) | ||||||||||||
Total from investment operations | (3.24 | ) | 2.16 | 12.74 | (0.51 | ) | (1.09 | ) | ||||||||||||
Dividends to shareholders: | ||||||||||||||||||||
Net investment income | (1.34 | ) | (0.81 | ) | (0.71 | ) | (0.72 | ) | (0.63 | ) | ||||||||||
Net asset value, end of year | $ | 35.37 | $ | 39.95 | $ | 38.60 | $ | 26.57 | $ | 27.80 | ||||||||||
TOTAL RETURN3 | (7.53 | )% | 5.57 | % | 48.25 | % | (2.01 | )% | (3.65 | )% | ||||||||||
RATIOS/SUPPLEMENTAL DATA: | ||||||||||||||||||||
Net assets, end of year (000’s omitted) | $ | 526,997 | $ | 567,239 | $ | 355,130 | $ | 95,661 | $ | 72,280 | ||||||||||
Ratios to average net assets4 of: | ||||||||||||||||||||
Expenses | 0.43 | %5,6 | 0.54 | %6,7,8 | 0.58 | % | 0.58 | %6 | 0.58 | %6 | ||||||||||
Net investment income | 4.16 | % | 2.44 | % | 2.29 | % | 2.68 | % | 2.11 | % | ||||||||||
Portfolio turnover rate9 | 67 | % | 59 | % | 56 | % | 56 | % | 60 | % |
WisdomTree
Global High Dividend Fund |
For the Year Ended March 31, 2023 |
For the Year Ended March 31, 2022 |
For the Year Ended March 31, 2021 |
For the Year Ended March 31, 2020 |
For the Year Ended March 31, 2019 |
|||||||||||||||
Net asset value, beginning of year | $ | 51.03 | $ | 46.89 | $ | 34.33 | $ | 46.11 | $ | 46.38 | ||||||||||
Investment operations: | ||||||||||||||||||||
Net investment income2 | 1.91 | 1.95 | 1.63 | 1.78 | 1.77 | |||||||||||||||
Net realized and unrealized gain (loss) | (4.21 | ) | 4.02 | 12.62 | (11.79 | ) | (0.18 | ) | ||||||||||||
Total from investment operations | (2.30 | ) | 5.97 | 14.25 | (10.01 | ) | 1.59 | |||||||||||||
Dividends to shareholders: | ||||||||||||||||||||
Net investment income | (1.87 | ) | (1.83 | ) | (1.69 | ) | (1.77 | ) | (1.86 | ) | ||||||||||
Net asset value, end of year | $ | 46.86 | $ | 51.03 | $ | 46.89 | $ | 34.33 | $ | 46.11 | ||||||||||
TOTAL RETURN3 | (4.28 | )% | 12.96 | % | 42.38 | % | (22.46 | )% | 3.59 | % | ||||||||||
RATIOS/SUPPLEMENTAL DATA: | ||||||||||||||||||||
Net assets, end of year (000’s omitted) | $ | 135,908 | $ | 68,889 | $ | 65,641 | $ | 66,952 | $ | 92,227 | ||||||||||
Ratios to average net assets4 of: | ||||||||||||||||||||
Expenses6 | 0.58 | %8 | 0.58 | %8 | 0.58 | % | 0.58 | % | 0.58 | % | ||||||||||
Net investment income | 4.09 | % | 3.98 | % | 4.05 | % | 3.88 | % | 3.86 | % | ||||||||||
Portfolio turnover rate9 | 45 | % | 39 | % | 48 | % | 32 | % | 19 | % |
1 | Per share amounts were adjusted to reflect a 2:1 stock split effective June 9, 2021. |
2 | Based on average shares outstanding. |
3 | Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period and redemption on the last day of the period. For the periods in which the investment advisor waived advisory fees, the total return would have been lower if certain expenses had not been waived. |
4 | The ratios to average net assets do not include net investment income (loss) or expenses of other funds in which the Fund invests. |
5 | Included in the expense ratio are “Other fees”. Without these expenses, the expense ratio would have been 0.42%. |
6 | The expense ratio includes investment advisory fee waivers. Without these investment advisory fee waivers, the expense ratio would have been unchanged. |
7 | Prior to January 1, 2022, the Fund’s annual advisory fee rate was 0.58% and, thereafter, was reduced to 0.42% per annum. |
8 | Included in the expense ratio are “Other fees”. Without these expenses, the expense ratio would have been unchanged. |
9 | Portfolio turnover rate excludes the value of the portfolio securities received or delivered as a result of in-kind creations or redemptions of the Fund’s capital shares. Short-term securities with maturities less than or equal to 365 days are excluded from the portfolio turnover calculation. |
WisdomTree Trust Prospectus 211 |
Financial Highlights
Selected data for a share of beneficial interest outstanding throughout the period is presented below:
WisdomTree India
Earnings Fund (consolidated) |
For the Year Ended March 31, 2023 |
For the Year Ended March 31, 2022 |
For the Year Ended March 31, 2021 |
For the Year Ended March 31, 2020 |
For the Year Ended March 31, 2019 |
|||||||||||||||
Net asset value, beginning of year | $ | 36.34 | $ | 31.26 | $ | 16.19 | $ | 26.26 | $ | 25.88 | ||||||||||
Investment operations: | ||||||||||||||||||||
Net investment income1 | 0.41 | 0.38 | 0.16 | 0.30 | 0.28 | |||||||||||||||
Net realized and unrealized gain (loss) | (3.45 | ) | 5.20 | 15.16 | (10.18 | ) | 0.45 | |||||||||||||
Net increase from payment by affiliate | — | 0.00 | 4 | — | — | — | ||||||||||||||
Total from investment operations | (3.04 | ) | 5.58 | 15.32 | (9.88 | ) | 0.73 | |||||||||||||
Dividends and distributions to shareholders: | ||||||||||||||||||||
Net investment income | (1.85 | ) | (0.50 | ) | (0.25 | ) | (0.19 | ) | (0.34 | ) | ||||||||||
Tax return of capital | — | — | — | — | (0.01 | ) | ||||||||||||||
Total dividends and distributions to shareholders | (1.85 | ) | (0.50 | ) | (0.25 | ) | (0.19 | ) | (0.35 | ) | ||||||||||
Net asset value, end of year | $ | 31.45 | $ | 36.34 | $ | 31.26 | $ | 16.19 | $ | 26.26 | ||||||||||
TOTAL RETURN2 | (8.05 | )% | 17.85 | %5 | 95.10 | % | (37.84 | )% | 2.89 | % | ||||||||||
RATIOS/SUPPLEMENTAL DATA: | ||||||||||||||||||||
Net assets, end of year (000’s omitted) | $ | 786,234 | $ | 893,841 | $ | 787,825 | $ | 563,317 | $ | 1,323,424 | ||||||||||
Ratios to average net assets of: | ||||||||||||||||||||
Expenses | 0.85 | %6,7,8 | 0.84 | %6,7,9 | 0.84 | %6,7,9 | 0.84 | %6,7,9 | 0.85 | %9 | ||||||||||
Net investment income | 1.25 | %6 | 1.07 | %6 | 0.67 | %6 | 1.22 | %6 | 1.14 | % | ||||||||||
Portfolio turnover rate3 | 51 | % | 30 | % | 23 | % | 32 | % | 37 | % |
1 | Based on average shares outstanding. |
2 | Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period and redemption on the last day of the period. Total return calculated for a period of less than one year is not annualized. For the periods in which the investment advisor waived advisory fees for the WisdomTree India Earnings Fund, the total return would have been lower if certain expenses had not been waived. |
3 | Portfolio turnover rate is not annualized for fiscal periods less than one year and excludes the value of the portfolio securities received or delivered as a result of in-kind creations or redemptions of the Fund’s capital shares. Short-term securities with maturities less than or equal to 365 days are excluded from the portfolio turnover calculation. |
4 | Amount represents less than $0.005. |
5 | Includes a voluntary reimbursement from the sub-advisor for investment losses on certain foreign exchange transactions during the period. Excluding this voluntary reimbursement, total return would have been 0.04% lower. |
6 | The ratios to average net assets do not include net investment income (loss) or expenses of other funds in which the Fund invests. |
7 | The expense ratio includes investment advisory fee waivers. Without these investment advisory fee waivers, the expense ratio would have been unchanged. |
8 | Includes interest expense of 0.02% for the fiscal year. |
9 | Includes interest expense of 0.01% for the fiscal year. |
212 WisdomTree Trust Prospectus |
Financial Highlights
Selected data for a share of beneficial interest outstanding throughout the period is presented below:
WisdomTree New Economy Real Estate Fund | For
the Year Ended March 31, 20234 |
For the Year Ended March 31, 2022 |
For the Year Ended March 31, 2021 |
For the Year Ended March 31, 2020 |
For the Year Ended March 31, 2019 |
|||||||||||||||
Net asset value, beginning of year | $ | 23.34 | $ | 26.55 | $ | 22.11 | $ | 32.15 | $ | 32.04 | ||||||||||
Investment operations: | ||||||||||||||||||||
Net investment income1 | 0.35 | 1.14 | 0.89 | 1.13 | 1.12 | |||||||||||||||
Net realized and unrealized gain (loss) | (6.37 | ) | (2.74 | ) | 4.35 | (8.79 | ) | 0.24 | ||||||||||||
Total from investment operations | (6.02 | ) | (1.60 | ) | 5.24 | (7.66 | ) | 1.36 | ||||||||||||
Dividends to shareholders: | ||||||||||||||||||||
Net investment income | (0.21 | ) | (1.61 | ) | (0.80 | ) | (2.38 | ) | (1.25 | ) | ||||||||||
Net asset value, end of year | $ | 17.11 | $ | 23.34 | $ | 26.55 | $ | 22.11 | $ | 32.15 | ||||||||||
TOTAL RETURN2 | (25.82 | )% | (6.45 | )% | 23.92 | % | (25.74 | )% | 4.51 | % | ||||||||||
RATIOS/SUPPLEMENTAL DATA: | ||||||||||||||||||||
Net assets, end of year (000’s omitted) | $ | 25,661 | $ | 54,850 | $ | 63,711 | $ | 80,703 | $ | 114,146 | ||||||||||
Ratios to average net assets of: | ||||||||||||||||||||
Expenses | 0.59 | %5 | 0.59 | %5 | 0.58 | % | 0.58 | %6 | 0.58 | %6 | ||||||||||
Net investment income | 1.90 | % | 4.48 | % | 3.59 | % | 3.75 | %6 | 3.72 | %6 | ||||||||||
Portfolio turnover rate3 | 165 | %4 | 7 | % | 39 | % | 21 | % | 17 | % |
1 | Based on average shares outstanding. |
2 | Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period and redemption on the last day of the period. Total return calculated for a period of less than one year is not annualized. |
3 | Portfolio turnover rate is not annualized for fiscal periods less than one year and excludes the value of the portfolio securities received or delivered as a result of in-kind creations or redemptions of the Fund’s capital shares. Short-term securities with maturities less than or equal to 365 days are excluded from the portfolio turnover calculation. |
4 | The information reflects the investment objective and strategy of the WisdomTree Global ex-U.S. Real Estate Fund through April 20, 2022 and the investment objective and strategy of the WisdomTree New Economy Real Estate Fund thereafter. The increase in the portfolio turnover rate was primarily a result of the aforementioned investment objective and strategy change. |
5 | Included in the expense ratio are “Other fees”. Without these expenses, the expense ratio would have been 0.58%. |
6 | The ratios to average net assets do not include net investment income (loss) or expenses of other funds in which the Fund invests. |
WisdomTree Trust Prospectus 213 |
Financial Highlights
Selected data for a share of beneficial interest outstanding throughout the period is presented below:
WisdomTree
Europe Quality Dividend Growth Fund |
For the Year Ended March 31, 2023 |
For the Year Ended March 31, 2022 |
For the Year Ended March 31, 2021 |
For the Year Ended March 31, 2020 |
For the Period Ended March 31, 2019 |
|||||||||||||||
Net asset value, beginning of year | $ | 31.45 | $ | 31.24 | $ | 22.13 | $ | 25.06 | $ | 26.24 | ||||||||||
Investment operations: | ||||||||||||||||||||
Net investment income1 | 0.72 | 1.08 | 0.66 | 0.62 | 0.61 | |||||||||||||||
Net realized and unrealized gain (loss) | (1.35 | ) | 0.21 | 2 | 9.10 | (2.93 | ) | (1.05 | ) | |||||||||||
Total from investment operations | (0.63 | ) | 1.29 | 9.76 | (2.31 | ) | (0.44 | ) | ||||||||||||
Dividends to shareholders: | ||||||||||||||||||||
Net investment income | (0.72 | ) | (1.08 | ) | (0.65 | ) | (0.62 | ) | (0.74 | ) | ||||||||||
Net asset value, end of year | $ | 30.10 | $ | 31.45 | $ | 31.24 | $ | 22.13 | $ | 25.06 | ||||||||||
TOTAL RETURN3 | (1.64 | )% | 4.02 | % | 44.43 | % | (9.46 | )% | (1.62 | )% | ||||||||||
RATIOS/SUPPLEMENTAL DATA: | ||||||||||||||||||||
Net assets, end of year (000’s omitted) | $ | 69,241 | $ | 72,346 | $ | 46,856 | $ | 25,450 | $ | 41,342 | ||||||||||
Ratios to average net assets of: | ||||||||||||||||||||
Expenses | 0.59 | %4 | 0.59 | %4 | 0.58 | % | 0.58 | % | 0.58 | % | ||||||||||
Net investment income | 2.63 | % | 3.26 | % | 2.37 | % | 2.42 | % | 2.41 | % | ||||||||||
Portfolio turnover rate5 | 43 | % | 53 | % | 61 | % | 43 | % | 42 | % |
WisdomTree Europe SmallCap Dividend Fund | For the Year Ended March 31, 2023 |
For the Year Ended March 31, 2022 |
For the Year Ended March 31, 2021 |
For the Year Ended March 31, 2020 |
For the Year Ended March 31, 2019 |
|||||||||||||||
Net asset value, beginning of year | $ | 68.00 | $ | 69.71 | $ | 41.06 | $ | 58.54 | $ | 69.55 | ||||||||||
Investment operations: | ||||||||||||||||||||
Net investment income1 | 3.42 | 2.03 | 1.31 | 2.43 | 2.57 | |||||||||||||||
Net realized and unrealized gain (loss) | (9.57 | ) | (1.79 | ) | 28.62 | (17.41 | ) | (10.87 | ) | |||||||||||
Total from investment operations | (6.15 | ) | 0.24 | 29.93 | (14.98 | ) | (8.30 | ) | ||||||||||||
Dividends to shareholders: | ||||||||||||||||||||
Net investment income | (3.53 | ) | (1.95 | ) | (1.28 | ) | (2.50 | ) | (2.71 | ) | ||||||||||
Net asset value, end of year | $ | 58.32 | $ | 68.00 | $ | 69.71 | $ | 41.06 | $ | 58.54 | ||||||||||
TOTAL RETURN3 | (8.50 | )% | 0.18 | % | 73.76 | % | (26.54 | )% | (12.19 | )% | ||||||||||
RATIOS/SUPPLEMENTAL DATA: | ||||||||||||||||||||
Net assets, end of year (000’s omitted) | $ | 250,797 | $ | 295,806 | $ | 310,227 | $ | 320,231 | $ | 667,402 | ||||||||||
Ratios to average net assets6 of: | ||||||||||||||||||||
Expenses7 | 0.65 | %4 | 0.73 | %4 | 0.58 | % | 0.58 | % | 0.58 | % | ||||||||||
Net investment income | 6.00 | % | 2.77 | % | 2.39 | % | 4.15 | % | 4.06 | % | ||||||||||
Portfolio turnover rate5 | 46 | % | 68 | % | 92 | % | 50 | % | 52 | % |
1 | Based on average shares outstanding. |
2 | The amount of net realized and unrealized gain per share does not correspond with the amount reported within the Statements of Changes due to the timing of capital share transactions of Fund shares and fluctuating market values during the fiscal year. |
3 | Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period and redemption on the last day of the period. For the periods in which the investment advisor waived advisory fees for the WisdomTree Europe SmallCap Dividend Fund, the total return would have been lower if certain expenses had not been waived. |
4 | Included in the expense ratio are “Other fees”. Without these expenses, the expense ratio would have been 0.58%. |
5 | Portfolio turnover rate excludes the value of the portfolio securities received or delivered as a result of in-kind creations or redemptions of the Fund’s capital shares. Short-term securities with maturities less than or equal to 365 days are excluded from the portfolio turnover calculation. |
6 | The ratios to average net assets do not include net investment income (loss) or expenses of other funds in which the Fund invests. |
7 | The expense ratio includes investment advisory fee waivers. Without these investment advisory fee waivers, the expense ratio would have been unchanged. |
214 WisdomTree Trust Prospectus |
Financial Highlights
Selected data for a share of beneficial interest outstanding throughout the period is presented below:
WisdomTree
International AI Enhanced Value Fund |
For the Year Ended March 31, 2023 |
For
the Year Ended March 31, 20221 |
For
the Year Ended March 31, 20211 |
For
the Year Ended March 31, 20201 |
For
the Year Ended March 31, 20191 |
|||||||||||||||
Net asset value, beginning of year | $ | 40.53 | $ | 42.46 | $ | 31.66 | $ | 41.19 | $ | 43.18 | ||||||||||
Investment operations: | ||||||||||||||||||||
Net investment income2 | 1.56 | 2.14 | 1.64 | 1.69 | 1.74 | |||||||||||||||
Net realized and unrealized gain (loss) | (1.46 | ) | (1.98 | ) | 10.78 | (9.52 | ) | (1.98 | ) | |||||||||||
Total from investment operations | 0.10 | 0.16 | 12.42 | (7.83 | ) | (0.24 | ) | |||||||||||||
Dividends to shareholders: | ||||||||||||||||||||
Net investment income | (1.74 | ) | (2.09 | ) | (1.62 | ) | (1.70 | ) | (1.75 | ) | ||||||||||
Net asset value, end of year | $ | 38.89 | $ | 40.53 | $ | 42.46 | $ | 31.66 | $ | 41.19 | ||||||||||
TOTAL RETURN3 | 0.80 | % | 0.30 | % | 39.87 | % | (19.77 | )% | (0.49 | )% | ||||||||||
RATIOS/SUPPLEMENTAL DATA: | ||||||||||||||||||||
Net assets, end of year (000’s omitted) | $ | 77,785 | $ | 121,582 | $ | 144,348 | $ | 106,061 | $ | 179,189 | ||||||||||
Ratios to average net assets of: | ||||||||||||||||||||
Expenses | 0.59 | %4 | 0.58 | %5,6,7 | 0.58 | %6,7 | 0.58 | %6,7 | 0.58 | %6,7 | ||||||||||
Net investment income | 4.25 | % | 5.03 | %7 | 4.34 | %7 | 4.17 | %7 | 4.17 | %7 | ||||||||||
Portfolio turnover rate8 | 148 | %9 | 99 | %9,10 | 61 | % | 45 | % | 41 | % |
WisdomTree
International Equity Fund |
For the Year Ended March 31, 2023 |
For the Year Ended March 31, 2022 |
For the Year Ended March 31, 2021 |
For the Year Ended March 31, 2020 |
For the Year Ended March 31, 2019 |
|||||||||||||||
Net asset value, beginning of year | $ | 53.09 | $ | 52.63 | $ | 39.65 | $ | 50.59 | $ | 54.63 | ||||||||||
Investment operations: | ||||||||||||||||||||
Net investment income2 | 2.11 | 1.94 | 1.47 | 1.69 | 1.86 | |||||||||||||||
Net realized and unrealized gain (loss) | (3.19 | ) | 0.50 | 12.99 | (10.88 | ) | (3.98 | ) | ||||||||||||
Total from investment operations | (1.08 | ) | 2.44 | 14.46 | (9.19 | ) | (2.12 | ) | ||||||||||||
Dividends to shareholders: | ||||||||||||||||||||
Net investment income | (2.21 | ) | (1.98 | ) | (1.48 | ) | (1.75 | ) | (1.92 | ) | ||||||||||
Net asset value, end of year | $ | 49.80 | $ | 53.09 | $ | 52.63 | $ | 39.65 | $ | 50.59 | ||||||||||
TOTAL RETURN3 | (1.55 | )% | 4.62 | % | 36.92 | % | (18.80 | )% | (3.89 | )% | ||||||||||
RATIOS/SUPPLEMENTAL DATA: | ||||||||||||||||||||
Net assets, end of year (000’s omitted) | $ | 570,153 | $ | 634,428 | $ | 602,625 | $ | 580,910 | $ | 837,260 | ||||||||||
Ratios to average net assets of: | ||||||||||||||||||||
Expenses | 0.49 | %11 | 0.49 | %6,7,11 | 0.48 | %6,7 | 0.48 | %6,7 | 0.48 | %6,7 | ||||||||||
Net investment income | 4.49 | % | 3.58 | %7 | 3.13 | %7 | 3.36 | %7 | 3.59 | %7 | ||||||||||
Portfolio turnover rate8 | 24 | % | 31 | % | 47 | % | 23 | % | 15 | % |
1 | The information reflects the investment objective and strategy of the WisdomTree International Dividend ex-Financials Fund through January 17, 2022 and the investment objective and strategy of the WisdomTree International AI Enhanced Value Fund thereafter. |
2 | Based on average shares outstanding. |
3 | Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period and redemption on the last day of the period. For the periods in which the investment advisor waived advisory fees, the total return would have been lower if certain expenses had not been waived. |
4 | Included in the expense ratio are “Other fees”. Without these expenses, the expense ratio would have been 0.58%. |
5 | Included in the expense ratio are “Other fees”. Without these expenses, the expense ratio would have been unchanged. |
6 | The expense ratio includes investment advisory fee waivers. Without these investment advisory fee waivers, the expense ratio would have been unchanged. |
7 | The ratios to average net assets do not include net investment income (loss) or expenses of other funds in which the Fund invests. |
8 | Portfolio turnover rate excludes the value of the portfolio securities received or delivered as a result of in-kind creations or redemptions of the Fund’s capital shares. Short-term securities with maturities less than or equal to 365 days are excluded from the portfolio turnover calculation. |
9 | The increase in the portfolio turnover rate was primarily a result of the change in investment objective and strategy on January 18, 2022. |
10 | On January 7, 2022, Voya Investment Management Co., LLC replaced Mellon Investments Corporation as sub-advisor to the Fund. |
11 | Included in the expense ratio are “Other fees”. Without these expenses, the expense ratio would have been 0.48%. |
WisdomTree Trust Prospectus 215 |
Financial Highlights
Selected data for a share of beneficial interest outstanding throughout the period is presented below:
WisdomTree
International High Dividend Fund |
For the Year Ended March 31, 2023 |
For the Year Ended March 31, 2022 |
For the Year Ended March 31, 2021 |
For the Year Ended March 31, 2020 |
For the Year Ended March 31, 2019 |
|||||||||||||||
Net asset value, beginning of year | $ | 39.93 | $ | 39.29 | $ | 29.53 | $ | 40.30 | $ | 43.25 | ||||||||||
Investment operations: | ||||||||||||||||||||
Net investment income1 | 2.11 | 1.90 | 1.54 | 1.65 | 1.78 | |||||||||||||||
Net realized and unrealized gain (loss) | (2.37 | ) | 0.63 | 9.73 | (10.75 | ) | (2.89 | ) | ||||||||||||
Total from investment operations | (0.26 | ) | 2.53 | 11.27 | (9.10 | ) | (1.11 | ) | ||||||||||||
Dividends to shareholders: | ||||||||||||||||||||
Net investment income | (2.11 | ) | (1.89 | ) | (1.51 | ) | (1.67 | ) | (1.84 | ) | ||||||||||
Net asset value, end of year | $ | 37.56 | $ | 39.93 | $ | 39.29 | $ | 29.53 | $ | 40.30 | ||||||||||
TOTAL RETURN2 | 0.01 | % | 6.61 | % | 38.88 | % | (23.48 | )% | (2.53 | )% | ||||||||||
RATIOS/SUPPLEMENTAL DATA: | ||||||||||||||||||||
Net assets, end of year (000’s omitted) | $ | 413,187 | $ | 201,634 | $ | 182,685 | $ | 174,236 | $ | 251,852 | ||||||||||
Ratios to average net assets3 of: | ||||||||||||||||||||
Expenses4 | 0.58 | %5 | 0.59 | %6 | 0.58 | % | 0.58 | % | 0.58 | % | ||||||||||
Net investment income | 5.89 | % | 4.80 | % | 4.43 | % | 4.18 | % | 4.32 | % | ||||||||||
Portfolio turnover rate7 | 36 | % | 40 | % | 57 | % | 34 | % | 24 | % |
WisdomTree
International LargeCap Dividend Fund |
For the Year Ended March 31, 2023 |
For the Year Ended March 31, 2022 |
For the Year Ended March 31, 2021 |
For the Year Ended March 31, 2020 |
For the Year Ended March 31, 2019 |
|||||||||||||||
Net asset value, beginning of year | $ | 48.95 | $ | 47.34 | $ | 36.81 | $ | 46.37 | $ | 49.48 | ||||||||||
Investment operations: | ||||||||||||||||||||
Net investment income1 | 1.94 | 1.79 | 1.42 | 1.56 | 1.81 | |||||||||||||||
Net realized and unrealized gain (loss) | (2.23 | ) | 1.63 | 10.55 | (9.52 | ) | (3.09 | ) | ||||||||||||
Total from investment operations | (0.29 | ) | 3.42 | 11.97 | (7.96 | ) | (1.28 | ) | ||||||||||||
Dividends to shareholders: | ||||||||||||||||||||
Net investment income | (2.04 | ) | (1.81 | ) | (1.44 | ) | (1.60 | ) | (1.83 | ) | ||||||||||
Net asset value, end of year | $ | 46.62 | $ | 48.95 | $ | 47.34 | $ | 36.81 | $ | 46.37 | ||||||||||
TOTAL RETURN2 | (0.05 | )% | 7.27 | % | 32.91 | % | (17.78 | )% | (2.55 | )% | ||||||||||
RATIOS/SUPPLEMENTAL DATA: | ||||||||||||||||||||
Net assets, end of year (000’s omitted) | $ | 491,834 | $ | 381,807 | $ | 352,717 | $ | 327,622 | $ | 389,510 | ||||||||||
Ratios to average net assets3 of: | ||||||||||||||||||||
Expenses4 | 0.49 | %8 | 0.49 | %8 | 0.48 | % | 0.48 | % | 0.48 | % | ||||||||||
Net investment income | 4.43 | % | 3.63 | % | 3.33 | % | 3.38 | % | 3.83 | % | ||||||||||
Portfolio turnover rate7 | 23 | % | 30 | % | 38 | % | 14 | % | 14 | % |
1 | Based on average shares outstanding. |
2 | Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period and redemption on the last day of the period. For the periods in which the investment advisor waived advisory fees, the total return would have been lower if certain expenses had not been waived. |
3 | The ratios to average net assets do not include net investment income (loss) or expenses of other funds in which the Fund invests. |
4 | The expense ratio includes investment advisory fee waivers. Without these investment advisory fee waivers, the expense ratio would have been unchanged. |
5 | Included in the expense ratio are “Other fees”. Without these expenses, the expense ratio would have been unchanged. |
6 | Included in the expense ratio are “Other fees”. Without these expenses, the expense ratio would have been 0.58%. |
7 | Portfolio turnover rate excludes the value of the portfolio securities received or delivered as a result of in-kind creations or redemptions of the Fund’s capital shares. Short-term securities with maturities less than or equal to 365 days are excluded from the portfolio turnover calculation. |
8 | Included in the expense ratio are “Other fees”. Without these expenses, the expense ratio would have been 0.48%. |
216 WisdomTree Trust Prospectus |
Financial Highlights
Selected data for a share of beneficial interest outstanding throughout the period is presented below:
WisdomTree
International MidCap Dividend Fund |
For the Year Ended March 31, 2023 |
For the Year Ended March 31, 2022 |
For the Year Ended March 31, 2021 |
For the Year Ended March 31, 2020 |
For the Year Ended March 31, 2019 |
|||||||||||||||
Net asset value, beginning of year | $ | 64.69 | $ | 67.16 | $ | 47.06 | $ | 61.98 | $ | 68.12 | ||||||||||
Investment operations: | ||||||||||||||||||||
Net investment income1 | 2.31 | 2.54 | 1.51 | 2.03 | 2.00 | |||||||||||||||
Net realized and unrealized gain (loss) | (6.20 | ) | (2.53 | ) | 20.12 | (14.87 | ) | (6.17 | ) | |||||||||||
Total from investment operations | (3.89 | ) | 0.01 | 21.63 | (12.84 | ) | (4.17 | ) | ||||||||||||
Dividends to shareholders: | ||||||||||||||||||||
Net investment income | (2.54 | ) | (2.48 | ) | (1.53 | ) | (2.08 | ) | (1.97 | ) | ||||||||||
Net asset value, end of year | $ | 58.26 | $ | 64.69 | $ | 67.16 | $ | 47.06 | $ | 61.98 | ||||||||||
TOTAL RETURN2 | (5.68 | )% | (0.13 | )% | 46.54 | % | (21.43 | )% | (6.16 | )% | ||||||||||
RATIOS/SUPPLEMENTAL DATA: | ||||||||||||||||||||
Net assets, end of year (000’s omitted) | $ | 128,175 | $ | 135,853 | $ | 144,404 | $ | 169,413 | $ | 278,924 | ||||||||||
Ratios to average net assets of: | ||||||||||||||||||||
Expenses | 0.59 | %3 | 0.59 | %3 | 0.58 | % | 0.58 | % | 0.58 | %4,5 | ||||||||||
Net investment income | 4.10 | % | 3.75 | % | 2.63 | % | 3.30 | % | 3.12 | %4 | ||||||||||
Portfolio turnover rate6 | 39 | % | 44 | % | 62 | % | 33 | % | 28 | % |
WisdomTree International Multifactor Fund | For the Year Ended March 31, 2023 |
For the Year Ended March 31, 2022 |
For the Year Ended March 31, 2021 |
For the Year Ended March 31, 2020 |
For the Period August 10, 2018* through March 31, 2019 |
|||||||||||||||
Net asset value, beginning of period | $ | 25.30 | $ | 25.43 | $ | 20.88 | $ | 24.72 | $ | 24.75 | ||||||||||
Investment operations: | ||||||||||||||||||||
Net investment income1 | 0.95 | 0.79 | 0.59 | 0.75 | 0.55 | |||||||||||||||
Net realized and unrealized gain (loss) | (0.33 | ) | 0.00 | 7 | 4.53 | (3.88 | ) | (0.27 | ) | |||||||||||
Total from investment operations | 0.62 | 0.79 | 5.12 | (3.13 | ) | 0.28 | ||||||||||||||
Dividends to shareholders: | ||||||||||||||||||||
Net investment income | (0.92 | ) | (0.92 | ) | (0.57 | ) | (0.71 | ) | (0.31 | ) | ||||||||||
Net asset value, end of period | $ | 25.00 | $ | 25.30 | $ | 25.43 | $ | 20.88 | $ | 24.72 | ||||||||||
TOTAL RETURN2 | 2.76 | % | 3.03 | % | 24.70 | % | (13.08 | )% | 1.18 | % | ||||||||||
RATIOS/SUPPLEMENTAL DATA: | ||||||||||||||||||||
Net assets, end of year (000’s omitted) | $ | 39,996 | $ | 32,886 | $ | 38,138 | $ | 33,408 | $ | 19,778 | ||||||||||
Ratios to average net assets of: | ||||||||||||||||||||
Expenses | 0.39 | %8 | 0.39 | %8 | 0.38 | % | 0.38 | %4,5 | 0.38 | %9 | ||||||||||
Net investment income | 3.98 | % | 3.01 | % | 2.47 | % | 3.04 | %4 | 3.61 | %9 | ||||||||||
Portfolio turnover rate6 | 118 | % | 105 | % | 123 | % | 132 | % | 114 | % |
* | Commencement of operations. The commencement of operations date is considered to be the date that the Fund began trading in the secondary market. |
1 | Based on average shares outstanding. |
2 | Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period and redemption on the last day of the period. Total return calculated for a period of less than one year is not annualized. For the periods in which the investment advisor waived advisory fees, the total return would have been lower if certain expenses had not been waived. |
3 | Included in the expense ratio are “Other fees”. Without these expenses, the expense ratio would have been 0.58%. |
4 | The ratios to average net assets do not include net investment income (loss) or expenses of other funds in which the Fund invests. |
5 | The expense ratio includes investment advisory fee waivers. Without these investment advisory fee waivers, the expense ratio would have been unchanged. |
6 | Portfolio turnover rate is not annualized for fiscal periods less than one year and excludes the value of the portfolio securities received or delivered as a result of in-kind creations or redemptions of the Fund’s capital shares. Short-term securities with maturities less than or equal to 365 days are excluded from the portfolio turnover calculation. |
7 | Amount represents less than $0.005. |
8 | Included in the expense ratio are “Other fees”. Without these expenses, the expense ratio would have been 0.38%. |
9 | Annualized. |
WisdomTree Trust Prospectus 217 |
Financial Highlights
Selected data for a share of beneficial interest outstanding throughout the period is presented below:
WisdomTree
International Quality Dividend Growth Fund |
For the Year Ended March 31, 2023 |
For the Year Ended March 31, 2022 |
For the Year Ended March 31, 2021 |
For the Year Ended March 31, 2020 |
For the Period Ended March 31, 2019 |
|||||||||||||||
Net asset value, beginning of year | $ | 36.82 | $ | 36.95 | $ | 25.87 | $ | 28.62 | $ | 30.50 | ||||||||||
Investment operations: | ||||||||||||||||||||
Net investment income1 | 1.06 | 1.22 | 0.91 | 0.70 | 0.58 | |||||||||||||||
Net realized and unrealized gain (loss) | (3.03 | ) | (0.27 | )2 | 10.98 | (2.77 | ) | (1.95 | ) | |||||||||||
Total from investment operations | (1.97 | ) | 0.95 | 11.89 | (2.07 | ) | (1.37 | ) | ||||||||||||
Dividends to shareholders: | ||||||||||||||||||||
Net investment income | (1.13 | ) | (1.08 | ) | (0.81 | ) | (0.68 | ) | (0.51 | ) | ||||||||||
Net asset value, end of year | $ | 33.72 | $ | 36.82 | $ | 36.95 | $ | 25.87 | $ | 28.62 | ||||||||||
TOTAL RETURN3 | (4.85 | )% | 2.46 | % | 46.22 | % | (7.43 | )% | (4.43 | )% | ||||||||||
RATIOS/SUPPLEMENTAL DATA: | ||||||||||||||||||||
Net assets, end of year (000’s omitted) | $ | 665,916 | $ | 373,740 | $ | 190,307 | $ | 68,551 | $ | 71,541 | ||||||||||
Ratios to average net assets of: | ||||||||||||||||||||
Expenses, net of expense waivers | 0.43 | %4 | 0.42 | % | 0.41 | %5 | 0.38 | %6 | 0.38 | %6 | ||||||||||
Expenses, prior to expense waivers | 0.43 | %4 | 0.42 | % | 0.44 | % | 0.48 | % | 0.48 | % | ||||||||||
Net investment income | 3.38 | % | 3.16 | % | 2.73 | % | 2.38 | % | 2.05 | % | ||||||||||
Portfolio turnover rate7 | 48 | % | 63 | % | 66 | % | 51 | % | 55 | % |
WisdomTree
International SmallCap Dividend Fund |
For the Year Ended March 31, 2023 |
For the Year Ended March 31, 2022 |
For the Year Ended March 31, 2021 |
For the Year Ended March 31, 2020 |
For the Year Ended March 31, 2019 |
|||||||||||||||
Net asset value, beginning of year | $ | 69.29 | $ | 72.16 | $ | 48.29 | $ | 65.74 | $ | 75.80 | ||||||||||
Investment operations: | ||||||||||||||||||||
Net investment income1 | 2.91 | 2.27 | 1.55 | 2.36 | 2.19 | |||||||||||||||
Net realized and unrealized gain (loss) | (8.19 | ) | (2.72 | ) | 23.97 | (17.32 | ) | (10.01 | ) | |||||||||||
Total from investment operations | (5.28 | ) | (0.45 | ) | 25.52 | (14.96 | ) | (7.82 | ) | |||||||||||
Dividends to shareholders: | ||||||||||||||||||||
Net investment income | (3.26 | ) | (2.42 | ) | (1.65 | ) | (2.49 | ) | (2.24 | ) | ||||||||||
Net asset value, end of year | $ | 60.75 | $ | 69.29 | $ | 72.16 | $ | 48.29 | $ | 65.74 | ||||||||||
TOTAL RETURN3 | (7.23 | )% | (0.79 | )% | 53.46 | % | (23.58 | )% | (10.41 | )% | ||||||||||
RATIOS/SUPPLEMENTAL DATA: | ||||||||||||||||||||
Net assets, end of year (000’s omitted) | $ | 1,193,793 | $ | 1,330,363 | $ | 1,403,518 | $ | 1,161,439 | $ | 1,673,095 | ||||||||||
Ratios to average net assets8 of: | ||||||||||||||||||||
Expenses9 | 0.60 | %10 | 0.61 | %10 | 0.58 | % | 0.58 | % | 0.58 | % | ||||||||||
Net investment income | 4.87 | % | 3.08 | % | 2.54 | % | 3.63 | % | 3.15 | % | ||||||||||
Portfolio turnover rate7 | 51 | % | 55 | % | 74 | % | 50 | % | 35 | % |
1 | Based on average shares outstanding. |
2 | The amount of net realized and unrealized loss per share does not correspond with the amount reported within the Statements of Changes due to the timing of capital share transactions of Fund shares and fluctuating market values during the fiscal year. |
3 | Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period and redemption on the last day of the period. For the periods in which the investment advisor waived advisory fees, the total return would have been lower if certain expenses had not been waived. |
4 | Included in the expense ratio are “Other fees”. Without these expenses, the expense ratio would have been 0.42%. |
5 | The investment advisor had contractually agreed to limit the advisory fee to 0.38% through July 31, 2020. On July 31, 2020, the contractual waiver expired and the advisory fee was permanently reduced to 0.42%. |
6 | Effective April 7, 2016, the investment advisor contractually agreed to limit the advisory fee to 0.38% through July 31, 2020, unless earlier terminated by the Board of Trustees of the Trust. |
7 | Portfolio turnover rate excludes the value of the portfolio securities received or delivered as a result of in-kind creations or redemptions of the Fund’s capital shares. Short-term securities with maturities less than or equal to 365 days are excluded from the portfolio turnover calculation. |
8 | The ratios to average net assets do not include net investment income (loss) or expenses of other funds in which the Fund invests. |
9 | The expense ratio includes investment advisory fee waivers. Without these investment advisory fee waivers, the expense ratio would have been unchanged. |
10 | Included in the expense ratio are “Other fees”. Without these expenses, the expense ratio would have been 0.58%. |
218 WisdomTree Trust Prospectus |
Financial Highlights
Selected data for a share of beneficial interest outstanding throughout the period is presented below:
WisdomTree Japan SmallCap Dividend Fund | For the Year Ended March 31, 2023 |
For the Year Ended March 31, 2022 |
For the Year Ended March 31, 2021 |
For the Year Ended March 31, 2020 |
For the Year Ended March 31, 2019 |
|||||||||||||||
Net asset value, beginning of year | $ | 66.61 | $ | 76.06 | $ | 58.64 | $ | 68.10 | $ | 80.93 | ||||||||||
Investment operations: | ||||||||||||||||||||
Net investment income1 | 1.58 | 1.71 | 1.17 | 1.14 | 1.00 | |||||||||||||||
Net realized and unrealized gain (loss) | 0.61 | 2 | (9.68 | ) | 18.13 | (8.95 | ) | (12.61 | ) | |||||||||||
Total from investment operations | 2.19 | (7.97 | ) | 19.30 | (7.81 | ) | (11.61 | ) | ||||||||||||
Dividends to shareholders: | ||||||||||||||||||||
Net investment income | (2.44 | ) | (1.48 | ) | (1.88 | ) | (1.65 | ) | (1.22 | ) | ||||||||||
Net asset value, end of year | $ | 66.36 | $ | 66.61 | $ | 76.06 | $ | 58.64 | $ | 68.10 | ||||||||||
TOTAL RETURN3 | 3.62 | % | (10.62 | )% | 33.27 | % | (11.85 | )% | (14.38 | )% | ||||||||||
RATIOS/SUPPLEMENTAL DATA: | ||||||||||||||||||||
Net assets, end of year (000’s omitted) | $ | 182,497 | $ | 213,148 | $ | 190,141 | $ | 237,503 | $ | 616,294 | ||||||||||
Ratios to average net assets4 of: | ||||||||||||||||||||
Expenses5 | 0.58 | % | 0.58 | % | 0.58 | % | 0.58 | % | 0.58 | % | ||||||||||
Net investment income | 2.56 | % | 2.34 | % | 1.73 | % | 1.67 | % | 1.35 | % | ||||||||||
Portfolio turnover rate6 | 26 | % | 36 | % | 43 | % | 38 | % | 42 | % |
1 | Based on average shares outstanding. |
2 | The amount of net realized and unrealized gain per share does not correspond with the amount reported within the Statements of Changes due to the timing of capital share transactions of Fund shares and fluctuating market values during the fiscal year. |
3 | Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period and redemption on the last day of the period. For the periods in which the investment advisor waived advisory fees, the total return would have been lower if certain expenses had not been waived. |
4 | The ratios to average net assets do not include net investment income (loss) or expenses of other funds in which the Fund invests. |
5 | The expense ratio includes investment advisory fee waivers. Without these investment advisory fee waivers, the expense ratio would have been unchanged. |
6 | Portfolio turnover rate excludes the value of the portfolio securities received or delivered as a result of in-kind creations or redemptions of the Fund’s capital shares. Short-term securities with maturities less than or equal to 365 days are excluded from the portfolio turnover calculation. |
WisdomTree Trust Prospectus 219 |
Financial Highlights
Selected data for a share of beneficial interest outstanding throughout the period is presented below:
WisdomTree
Europe Hedged Equity Fund |
For the Year Ended March 31, 2023 |
For the Year Ended March 31, 2022 |
For the Year Ended March 31, 2021 |
For the Year Ended March 31, 2020 |
For the Year Ended March 31, 2019 |
|||||||||||||||
Net asset value, beginning of year | $ | 74.04 | $ | 72.71 | $ | 51.83 | $ | 63.90 | $ | 62.67 | ||||||||||
Investment operations: | ||||||||||||||||||||
Net investment income1 | 2.12 | 1.38 | 1.76 | 1.52 | 1.79 | |||||||||||||||
Net realized and unrealized gain (loss) | 7.75 | 1.62 | 20.86 | (12.21 | ) | 0.90 | ||||||||||||||
Total from investment operations | 9.87 | 3.00 | 22.62 | (10.69 | ) | 2.69 | ||||||||||||||
Dividends and distributions to shareholders: | ||||||||||||||||||||
Net investment income | (1.89 | ) | (1.67 | ) | (1.74 | ) | (1.38 | ) | (1.29 | ) | ||||||||||
Tax return of capital | — | — | — | — | (0.17 | ) | ||||||||||||||
Total dividends and distributions to shareholders | (1.89 | ) | (1.67 | ) | (1.74 | ) | (1.38 | ) | (1.46 | ) | ||||||||||
Net asset value, end of year | $ | 82.02 | $ | 74.04 | $ | 72.71 | $ | 51.83 | $ | 63.90 | ||||||||||
TOTAL RETURN2 | 13.94 | % | 4.04 | % | 44.22 | % | (17.15 | )% | 4.33 | % | ||||||||||
RATIOS/SUPPLEMENTAL DATA: | ||||||||||||||||||||
Net assets, end of year (000’s omitted) | $ | 1,402,596 | $ | 1,865,747 | $ | 1,937,668 | $ | 2,200,271 | $ | 3,744,358 | ||||||||||
Ratios to average net assets of: | ||||||||||||||||||||
Expenses | 0.79 | %3 | 0.59 | %3 | 0.58 | % | 0.58 | % | 0.58 | % | ||||||||||
Net investment income | 2.95 | % | 1.79 | % | 2.81 | % | 2.29 | % | 2.86 | % | ||||||||||
Portfolio turnover rate4 | 38 | % | 34 | % | 55 | % | 26 | % | 18 | % |
WisdomTree
Europe Hedged SmallCap Equity Fund |
For the Year Ended March 31, 2023 |
For the Year Ended March 31, 2022 |
For the Year Ended March 31, 2021 |
For the Year Ended March 31, 2020 |
For the Year Ended March 31, 2019 |
|||||||||||||||
Net asset value, beginning of year | $ | 34.73 | $ | 33.96 | $ | 23.43 | $ | 30.17 | $ | 30.62 | ||||||||||
Investment operations: | ||||||||||||||||||||
Net investment income1 | 1.73 | 0.75 | 1.02 | 1.22 | 1.06 | |||||||||||||||
Net realized and unrealized gain (loss) | (1.06 | ) | 0.91 | 5 | 10.56 | (6.92 | ) | (0.89 | ) | |||||||||||
Total from investment operations | 0.67 | 1.66 | 11.58 | (5.70 | ) | 0.17 | ||||||||||||||
Dividends to shareholders: | ||||||||||||||||||||
Net investment income | (1.63 | ) | (0.89 | ) | (1.05 | ) | (1.04 | ) | (0.62 | ) | ||||||||||
Net asset value, end of year | $ | 33.77 | $ | 34.73 | $ | 33.96 | $ | 23.43 | $ | 30.17 | ||||||||||
TOTAL RETURN2 | 2.53 | % | 4.86 | % | 50.50 | % | (19.62 | )% | 0.54 | % | ||||||||||
RATIOS/SUPPLEMENTAL DATA: | ||||||||||||||||||||
Net assets, end of year (000’s omitted) | $ | 48,967 | $ | 60,772 | $ | 37,353 | $ | 49,197 | $ | 120,671 | ||||||||||
Ratios to average net assets of: | ||||||||||||||||||||
Expenses | 0.59 | %3 | 0.63 | %3 | 0.58 | % | 0.58 | % | 0.58 | % | ||||||||||
Net investment income | 5.34 | % | 2.08 | % | 3.59 | % | 3.99 | % | 3.55 | % | ||||||||||
Portfolio turnover rate4 | 44 | % | 57 | % | 77 | % | 49 | % | 37 | % |
1 | Based on average shares outstanding. |
2 | Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period and redemption on the last day of the period. |
3 | Included in the expense ratio are “Other fees”. Without these expenses, the expense ratio would have been 0.58%. |
4 | Portfolio turnover rate excludes the value of the portfolio securities received or delivered as a result of in-kind creations or redemptions of the Fund’s capital shares. Short-term securities with maturities less than or equal to 365 days are excluded from the portfolio turnover calculation. |
5 | The amount of net realized and unrealized gain per share does not correspond with the amount reported within the Statements of Changes due to the timing of capital share transactions of Fund shares and fluctuating market values during the fiscal year. |
220 WisdomTree Trust Prospectus |
Financial Highlights
Selected data for a share of beneficial interest outstanding throughout the period is presented below:
WisdomTree
International Hedged Quality Dividend Growth Fund |
For the Year Ended March 31, 2023 |
For the Year Ended March 31, 2022 |
For the Year Ended March 31, 2021 |
For the Year Ended March 31, 2020 |
For the Year Ended March 31, 2019 |
|||||||||||||||
Net asset value, beginning of year | $ | 43.04 | $ | 41.17 | $ | 30.61 | $ | 32.14 | $ | 30.78 | ||||||||||
Investment operations: | ||||||||||||||||||||
Net investment income1 | 1.29 | 1.25 | 0.88 | 0.78 | 0.64 | |||||||||||||||
Net realized and unrealized gain (loss) | (0.45 | )4 | 2.03 | 10.54 | (1.59 | ) | 0.83 | |||||||||||||
Net increase from payment by affiliate | — | 0.00 | 5 | 0.08 | — | — | ||||||||||||||
Total from investment operations | 0.84 | 3.28 | 11.50 | (0.81 | ) | 1.47 | ||||||||||||||
Dividends and distributions to shareholders: | ||||||||||||||||||||
Net investment income | (1.33 | ) | (1.41 | ) | (0.94 | ) | (0.72 | ) | (0.11 | ) | ||||||||||
Capital gains | (3.38 | ) | — | — | — | — | ||||||||||||||
Total dividends and distributions to shareholders | (4.71 | ) | (1.41 | ) | (0.94 | ) | (0.72 | ) | (0.11 | ) | ||||||||||
Net asset value, end of year | $ | 39.17 | $ | 43.04 | $ | 41.17 | $ | 30.61 | $ | 32.14 | ||||||||||
TOTAL RETURN2 | 3.00 | % | 7.93 | %6 | 37.85 | %7 | (2.70 | )% | 4.78 | % | ||||||||||
RATIOS/SUPPLEMENTAL DATA: | ||||||||||||||||||||
Net assets, end of year (000’s omitted) | $ | 1,396,586 | $ | 1,177,093 | $ | 899,491 | $ | 592,346 | $ | 438,708 | ||||||||||
Ratios to average net assets of: | ||||||||||||||||||||
Expenses | 0.59 | %8,9,10 | 0.58 | %8,9 | 0.58 | %8,9 | 0.58 | %8,9 | 0.58 | % | ||||||||||
Net investment income | 3.35 | %8 | 2.85 | %8 | 2.37 | %8 | 2.32 | %8 | 2.07 | % | ||||||||||
Portfolio turnover rate3 | 86 | % | 61 | % | 67 | % | 61 | % | 56 | % |
1 | Based on average shares outstanding. |
2 | Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period and redemption on the last day of the period. For the periods in which the investment advisor waived advisory fees for the WisdomTree International Hedged Quality Dividend Growth Fund, the total return would have been lower if certain expenses had not been waived. |
3 | Portfolio turnover rate excludes the value of the portfolio securities received or delivered as a result of in-kind creations or redemptions of the Fund’s capital shares. Short-term securities with maturities less than or equal to 365 days are excluded from the portfolio turnover calculation. |
4 | The amount of net realized and unrealized loss per share does not correspond with the amount reported within the Statements of Changes due to the timing of capital share transactions of Fund shares and fluctuating market values during the fiscal year. |
5 | Amount represents less than $0.005. |
6 | Includes a voluntary reimbursement from the sub-advisor for investment losses on certain equity transactions during the period. Excluding the voluntary reimbursement, total return would have been unchanged. |
7 | Includes a voluntary reimbursement from the sub-advisor for investment losses on certain foreign exchange transactions during the period. Excluding this voluntary reimbursement, total return would have been 0.27% lower. |
8 | The ratios to average net assets do not include net investment income (loss) or expenses of other funds in which the Fund invests. |
9 | The expense ratio includes investment advisory fee waivers. Without these investment advisory fee waivers, the expense ratio would have been unchanged. |
10 | Included in the expense ratio are “Other fees”. Without these expenses, the expense ratio would have been 0.58%. |
WisdomTree Trust Prospectus 221 |
Financial Highlights
Selected data for a share of beneficial interest outstanding throughout the period is presented below:
WisdomTree Japan Hedged Equity Fund | For the Year Ended March 31, 2023 |
For the Year Ended March 31, 2022 |
For the Year Ended March 31, 2021 |
For the Year Ended March 31, 2020 |
For the Year Ended March 31, 2019 |
|||||||||||||||
Net asset value, beginning of year | $ | 64.64 | $ | 61.01 | $ | 42.64 | $ | 50.42 | $ | 55.76 | ||||||||||
Investment operations: | ||||||||||||||||||||
Net investment income1 | 1.91 | 1.52 | 1.02 | 1.05 | 1.06 | |||||||||||||||
Net realized and unrealized gain (loss) | 6.54 | 2 | 3.76 | 18.73 | (7.52 | ) | (5.03 | ) | ||||||||||||
Net increase from payment by affiliate | — | — | 0.00 | 3 | — | — | ||||||||||||||
Total from investment operations | 8.45 | 5.28 | 19.75 | (6.47 | ) | (3.97 | ) | |||||||||||||
Dividends to shareholders: | ||||||||||||||||||||
Net investment income | (2.57 | ) | (1.65 | ) | (1.38 | ) | (1.31 | ) | (1.37 | ) | ||||||||||
Net asset value, end of year | $ | 70.52 | $ | 64.64 | $ | 61.01 | $ | 42.64 | $ | 50.42 | ||||||||||
TOTAL RETURN4 | 13.48 | % | 8.79 | % | 46.97 | %5 | (13.26 | )% | (7.20 | )% | ||||||||||
RATIOS/SUPPLEMENTAL DATA: | ||||||||||||||||||||
Net assets, end of year (000’s omitted) | $ | 1,530,182 | $ | 1,919,844 | $ | 1,674,759 | $ | 1,709,801 | $ | 3,254,417 | ||||||||||
Ratios to average net assets of: | ||||||||||||||||||||
Expenses | 0.48 | % | 0.48 | % | 0.48 | % | 0.48 | % | 0.48 | % | ||||||||||
Net investment income | 2.93 | % | 2.45 | % | 2.03 | % | 2.08 | % | 1.96 | % | ||||||||||
Portfolio turnover rate6 | 37 | % | 22 | % | 25 | % | 20 | % | 23 | % |
WisdomTree
Japan Hedged SmallCap Equity Fund |
For the Year Ended March 31, 2023 |
For the Year Ended March 31, 2022 |
For the Year Ended March 31, 2021 |
For the Year Ended March 31, 2020 |
For the Year Ended March 31, 2019 |
|||||||||||||||
Net asset value, beginning of year | $ | 42.67 | $ | 44.76 | $ | 33.88 | $ | 39.57 | $ | 44.13 | ||||||||||
Investment operations: | ||||||||||||||||||||
Net investment income1 | 1.12 | 0.99 | 0.64 | 0.75 | 0.51 | |||||||||||||||
Net realized and unrealized gain (loss) | 6.12 | (1.80 | ) | 11.45 | (5.52 | ) | (4.31 | ) | ||||||||||||
Total from investment operations | 7.24 | (0.81 | ) | 12.09 | (4.77 | ) | (3.80 | ) | ||||||||||||
Dividends to shareholders: | ||||||||||||||||||||
Net investment income | (1.66 | ) | (1.28 | ) | (1.21 | ) | (0.92 | ) | (0.76 | ) | ||||||||||
Net asset value, end of year | $ | 48.25 | $ | 42.67 | $ | 44.76 | $ | 33.88 | $ | 39.57 | ||||||||||
TOTAL RETURN4 | 17.36 | % | (1.80 | )% | 36.31 | % | (12.41 | )% | (8.77 | )% | ||||||||||
RATIOS/SUPPLEMENTAL DATA: | ||||||||||||||||||||
Net assets, end of year (000’s omitted) | $ | 24,125 | $ | 25,603 | $ | 31,332 | $ | 44,049 | $ | 83,097 | ||||||||||
Ratios to average net assets of: | ||||||||||||||||||||
Expenses | 0.58 | % | 0.58 | % | 0.58 | % | 0.58 | % | 0.58 | % | ||||||||||
Net investment income | 2.52 | % | 2.26 | % | 1.67 | % | 1.90 | % | 1.20 | % | ||||||||||
Portfolio turnover rate6 | 46 | % | 41 | % | 41 | % | 36 | % | 38 | % |
1 | Based on average shares outstanding. |
2 | The amount of net realized and unrealized gain per share does not correspond with the amount reported within the Statements of Changes due to the timing of capital share transactions of Fund shares and fluctuating market values during the fiscal year. |
3 | Amount represents less than $0.005. |
4 | Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period and redemption on the last day of the period. |
5 | Includes a voluntary reimbursement from the sub-advisor for investment losses on certain foreign exchange transactions during the period. Excluding this voluntary reimbursement, total return would have been unchanged. |
6 | Portfolio turnover rate excludes the value of the portfolio securities received or delivered as a result of in-kind creations or redemptions of the Fund’s capital shares. Short-term securities with maturities less than or equal to 365 days are excluded from the portfolio turnover calculation. |
222 WisdomTree Trust Prospectus |
WisdomTree Trust
250 West 34th Street, 3rd Floor
New York, NY 10119
The Funds’ current SAI provides additional detailed information about the Funds. The Trust has electronically filed the SAI with the SEC. It is incorporated by reference in this Prospectus.
Additional information about the Funds’ investments is or will be available in the Funds’ annual and semi-annual reports to shareholders. In the annual report you will find a discussion of the market conditions and investment strategies that significantly affected the Funds’ performance during the last fiscal year.
To make shareholder inquiries, for more detailed information on the Funds, or to request the SAI or annual or semi-annual shareholder reports, as applicable, free of charge, please: |
|||||
Call: | 1-866-909-9473
Monday through Friday 9:00 a.m. to 5:30 p.m. (Eastern time) |
Write: | WisdomTree Trust c/o Foreside Fund Services, LLC Three Canal Plaza, Suite 100 Portland, Maine 04101 |
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Visit: | www.wisdomtree.com/investments | ||||
Reports and other information about the Funds are available on the EDGAR Database on the SEC’s Internet site at www.sec.gov, and copies of this information may be obtained, after paying a duplicating fee, by electronic request at the following e-mail address: [email protected].
No person is authorized to give any information or to make any representations about any Fund and its shares not contained in this Prospectus and you should not rely on any other information. Read and keep this Prospectus for future reference. |
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distributed in the U.S. by
WisdomTree® is a registered mark of WisdomTree, Inc.
INVESTMENT COMPANY ACT FILE
NO. 811-21864 |